What is a DSP?

October 29, 2015

What is a DSP?

I’ve been in the PPC game for over 11 years now and boy has it changed.

We’ve seen new ad platforms, new match types,  geo-targeting, scripting, an abundance of new keyword research tools, numerous optimisation platforms promising to better our accounts, consolidation of tracking with Google Tag Manager, bid strategies and most recently media buying by the form of a DSP or Demand-side Platform.

If we ask Google what a DSP is:

demandside platform (DSP) is a piece of the technology puzzle that fits into the larger real-time bidding (RTB) ecosystem. Specifically, a DSP enables advertisers to purchase display ad inventory via RTB exchanges. The most well-known DSPs are: MediaMath; Turn; Invite Media; and, x+1.

Oh that makes perfect sense, right?……

In my latest post I aim to translate the above into something resembling plain English.

So what is a DSP?

A DSP – or in its full attire, demand-side platform – is a piece of software that allows users to purchase media/advertising space on the web in an automated fashion based on pre-set targeting. This method is often used by digital media agencies such as ourselves to assist in purchasing large volumes of space at small prices. At least that’s the aim.

How do they help?

Think back a couple of years; did you ever visit a website and think ‘Yeah I’d like to advertise on their site‘?

You process would probably be to have made contact with the webmaster and asked for a rate card, which looking back was ludicrously expensive. You’d have negotiated the price down saying to yourself ‘Yeah I’ve got a good deal here!

Well how good a deal was that really retrospectively? I’ve actively paid £3,000 per month to advertise two banners on a news site for one month and received a few hundred clicks for the privilege. (This was some years back now!)

Well, DSPs take out the people part of the ad buying process making it a cheaper and far more efficient process.

How does a DSP work in practice?

Well, in plain english a DSP allows advertisers to buy impressions across a large range of publisher sites targeted to users based on their location, previous web behaviour etc. Those publishers make their ad spaces available through ad exchanges which DSPs use to automatically decide which impressions are viable for the advertiser and purchase that space as required.

The price the advertiser pays for that space (impression) is decided in real-time by a practice know as RTB, or real-time bidding. RTB means that there is no human negotiation on pricing, the RTB process automatically auctions off the impressions to the highest bidder (similar to what takes place in AdWords with its AdRank algorithm).

This system is the same as the Google Display Network (GDN), which is restricted to only sites serving GDN ad space. The second advantage of DSPs is that they encompass these ad networks but also offer reach to wide range of other websites that do not offer ad space through the GDN.

Are DSPs here to stay?

Well, in my opinion yes.

We are seeing more and more publishers making their inventory available for real-time bidding, which for advertisers makes for good reading as RTB is a far more cost-effective way of advertising. This is not to say that humans will be pulled from the process altogether as they are still required for the optimisation side of things.

An example of how DSPs can work

So I wanted to set-up an example campaign, to show you how we can use a DSP to actively target an audience which would otherwise be unattainable via GDN and other more domestic platforms. In the example you will see how we combine lateral targeting to form our target audience.

The scenario is a van dealership looking to extend its reach but at a controlled cost. The main challenges from the off are that the is no such audience as ‘people interested in vans’. So how do we reach those van lovers?

Well, we identified three main audiences that work together to highlight the white van man. These are:

  • Auto Lovers (loves all cars,direct message, all about deals)
    Targeting sites such as: pistonheads.com, carthrottle.com, teslarati.com
  • Sports (football, white vans, lateral targeting)
    Targeting sites such as: football-league.co.uk, 90min.com, givemesport.com, whynotsport.com
  • News (huge reach, wide audience, keyword targeting)
    Targeting sites such as: mirror.co.uk, dailystar.co.uk

Perfect, so what formats would we use?

Native – Native ads are those ads that don’t look like ads, but actually are ads that fool us into thinking that they’re content, when actually they are ads.

Example of a Native Ad hard at work

Banner – Exactly what it says on the tin.

Banner_Ad

Where do we target those audiences?

Service Stations: Targeting users by service station location is great as we can advertise to them whilst they are on rest periods.

Service_Stations

Ports: As above, we can target based on user location to ferry ports for example. Effectively targeting drivers in key areas where we know typically the audience would be using their smartphones, allowing us to bid harder in these areas.

Ports

Costs

So that’s all well and good, but DSPs are expensive right? Well, in reality no, not really. For the demo campaign we set-up here, the following costs were quoted by the DSP we use internally at White.net.

CPM (cost-per-thousand impressions):

  • Auto: £2.00
  • Sports: £1.60
  • News: £1.40

I was very happy with the CPM estimates, now you could argue that they do not look to dissimilar to that of the Google Display Network, but, lets not forget that we are targeting our exact audience here and not using a hit & hope method that we would otherwise use with GDN as white van man is not a typical audience.

Now of course using a Demand-side Platform is not free, product fees vary by provider. Some provide a % of spend fee, others fixed fees based on spend thresholds per month. Do your research to see which works best for you, not what works best for the provider.

Are DSPs for me?

If you want to broaden your reach, extend your re-marketing efforts and bring down advertising costs then yes, yes they are.

I’d like to know a little more

If you would like to learn more about DSPs and harnessing their power for your gain then reach out to us, we’d be more than happy to discuss your needs.

I hope the post was helpful, and as always I welcome your comments below.

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