What Is a Demand-Side Platform (DSP)? Key Features, Architecture, and Examples

What Is a Demand-Side Platform (DSP)? Key Features, Architecture, and Examples

Last Updated: March 16, 2021

A demand-side platform (DSP) is defined as an adtech software application that enables brands, advertisers, and agencies to programmatically buy ads (banner, video, native, social, and search ads) from marketplaces such as ad networks or supply-side platforms.In this article, we will delve into various aspects of a demand-side platform, including its workings and the architecture, how it is different from an ad network, key features to look for, and a few examples of DSPs.

Demand-side platforms are becoming ubiquitous as they allow advertisers to programmatically buy ad impressions on publisher properties (websites, mobile apps, etc.) from a diverse ad inventory in real-time. Demand-side platforms, along with supply-side platforms, form the core of programmatic advertisingOpens a new window .

According to research by Market Study Report LLC, the demand-side platform market will increase its annual revenue from $9.7 billion in 2019 to $31.3 billion in 2024. Advertisers are looking to dive deep into programmatic advertising and the compound annual growth rate (CAGR) of 26.3% demonstrates this.

Table of Contents

What Is a Demand-side Platform (DSP)?

A demand-side platform is an adtech software application used for programmatic ad buying. DSP is to advertisers and agencies what a supply-side platform (SSP) is to publishers.

Advertisers and agencies use DSPs to buy ad inventories from publishers through supply-side platformsOpens a new window , ad networksOpens a new window , and ad exchangesOpens a new window . So, unlike independent networks such as Google, Facebook, or Bing that allow advertisers to buy ads on their respective platforms, DSPs enable advertisers to buy search, display, mobile, video, and native ads from multiple sources via a single interface.

Heres how DSPs help advertisers manage their programmatic campaigns:

  1. Interact with ad exchanges or SSPs to purchase ad impressions on publisher websites or apps
  2. Optimize campaign budget spend to get the maximum ROI
  3. Integrate with third-party tools to improve targeting capabilities, prevent ad frauds, and manage payment transactions
  4. Provide an intuitive UI and repository to help advertisers manage their campaigns and ad creatives respectively
  5. Track advertising metrics and generate reports

What Are the Types of Demand-Side Platforms?

A demand-side platform is categorized into two types, viz. self-serve and full-service. Heres a brief explanation of each:

1. Self-serve DSPs

A self-serve demand-side platform allows advertisers to create, manage, and optimize ad campaigns without external assistance. A self-serve DSP puts all the responsibility of ad campaigns right from ideation to execution to analysis on the advertisers shoulders. While a self-serve DSP reduces overhead costs and gives advertisers full control over their campaigns, it is an easy-to-moderate learning curve, depending on in-house expertise.

2. Full-service DSPs

A full-service demand-side platform lets you manage your ad campaigns through an account manager and sales representative. Advertisers have to commit to a minimum budget for every campaign when using a full-service DSP.

Although these DSPs tend to be heavy on the wallet, they let you outsource the responsibility to an external team. Large-scale organizations with hefty budgets tend to opt for full-service DSPs.

The biggest downside of them, however, is that campaign management is not as flexible as self-serve DSPs. To make the slightest change, you need your account manager to get it done, and ir could take some time depending on their availability.

How Does a Demand-Side Platform Work?

DSPs introduce efficiency by eliminating the manual process of media buying. DSPs work in quite an elaborate fashion, but heres a gist of it.

The process begins with the advertiser using the campaign builder tool (offered by the DSP) to set the audience targeting criteria and upload ad creatives.

Publishers enlist their ad inventories on the ad exchange through an SSP. The ad exchange communicates with the DSP about the availability of an ad impression. The DSP analyzes the impression based on the targeting criteria and its relevance to the advertiser and makes a bid to buy the impression.

The DSP buys ad impressions in real-time through a process known as during the real-time bidding (RTB) auction. After the DSP purchases the ad impression, the ad is displayed on the publishers website.

This entire process takes place within a few milliseconds.

Ad Networks vs. Demand-Side Platforms

It might seem that ad networks and DSPs provide the same offering. In fact, they do, but they both operate in a starkly different function. Here are the key differences.

The most significant difference between an ad network and a DSP is the feature set. DSPs enable advertisers to manage the purchase, optimization, and analysis of the ads through a single interface, whereas ad networks offer a limited set of features aimed at audience targeting and media buying.

The capability of participating in real-time bidding (RTB) sets DSPs apart from ad networks, although several ad networks are catching up with the trend and now support RTB auctions.

Ad networks tend to be rigid in their targeting feature. Advertisers are restricted to choose from the available audience segments. On the contrary, with DSPs, advertisers are free to reach out to their audience by applying their targeting criteria.

Learn More: Ad Network vs. Ad Exchange: Key Differences and SimilaritiesOpens a new window

What Is the Architecture of a Demand-Side Platform?

architecture of a dsp

DSPs help brands and advertisers set up and manage programmatic ad campaigns. Although the makeup of DSPs differ based on the type and company, here is the fundamental demand-side platform architecture.

1. Bidder

The bidder evaluates the ad inventory offered by the SSP and places the right bid amount during RTB auctions. Typically, a DSP maintains multiple bidders at different data centers along with the advertisers audience targeting parameters to reduce latency. The bidder can place bids across multiple RTB auctions. The bidder is capable of forecasting the price of the ad inventory based on historical data, predicting the traffic for the inventory and the ad click-through rate (CTR).

2. Ad Server

Ad creatives and the ad markup are stored on the ad server. The ad server decides and serves the ad creative to the publishers website and tracks the conversion data.

The ad server determines the best value per impression and identifies fraudulent ad inventory to prevent ad frauds. The built-in conversion tracking feature helps advertisers optimize their campaigns as required.

3. Data Platform

The data platform tracks interactions from the bidder and ad server. The data platform can integrate an external data management platform (DMP) to enrich user profiles.

4. User Interface (UI)

The user interface is the visual elements advertisers see when managing ad campaigns. The UI allows advertisers to create and manage ad campaigns and view campaign performance among other functionalities.

5. Banker

The banker makes sure that the campaign expenditure doesnt exceed the campaign budget. The banker is also known as the cashier. Certain DSPs have add-on features that allow advertisers to manage budgets uniformly throughout a campaigns duration.

6. Campaign Tracker

As the name suggests, the campaign tracker tracks campaign performance and reports metrics such as the win rate, impressions, clicks, cost per impressions, CTR, etc. The conversion tracking mechanism uses pixels or the postback method to track conversions. The campaign performance data is then forwarded to the reporting database.

7. Reporting Database

The reporting database consolidates the campaign performance data collected by the tracker. The reports are displayed on the UI dashboard for users to glean insights from.

8. User Profile Database

This database stores user details such as their characteristics, the segments theyre part of, ads theyve viewed, their conversion data, and so on. The user profile database is useful during remarketing campaigns.

9. Integrations

Third-party integrations can enhance the functionality of a DSP. A DSP can integrate with ad exchanges, payment gateways, DMPs, analytics platforms, and brand safety solutions.

7 Key Features of a Demand-Side Platform

key features of a dsp

To enable advertisers to manage and optimize their ad campaigns, a DSP should provide the following key features:

1. Audience Targeting Capabilities

Advertisers can reach out to the different segments of their audience by applying various targeting criteria. Generally, DSPs offer the following audience targeting capabilities:

Geo-targeting: Targets audience based on their location data such as country, city, state, or zip code
Demographic Targeting: This includes data such as their age (or age group), gender, education, job title, income, etc.
Behavioral Targeting: Targets users based on their interests and behavioral traits such as websites visited, products purchases, product usage data, etc.
Contextual Targeting: Places ads relevant to the website/mobile app content, URL, or website category
Device Targeting: Shows users ads on specific devices or operating systems to enhance personalization
Retargeting: A form of behavioral targeting to target users that have visited your website before and can also help you run highly contextual ads

2. Bidding Strategies

RTB auctions determine the prices of ad impressions. Therefore most DSPs follow the CPM (cost per mille, i.e., 1000 impressions) model. Some DSPs modify the CPM model by offering a maximum or variable CPM pricing to optimize the campaign budget.

If you’re looking for performance-based metrics, DSPs also provide CPC (cost per click) and CPI (cost per install) bidding strategies.

3. Budgeting Strategies

To ensure that your budget lasts throughout the campaign duration, DSPs enable advanced budgeting options such as daily budget, campaign pacing, and a lifetime budget.

4. Advanced Targeting Options

The targeting capabilities let you reach your ideal audience while ensuring your budget is spent efficiently.

Day Parting: This feature allows advertisers to run campaigns on a schedule for optimum campaign visibility
Frequency Capping: To avoid ad fatigue, advertisers can set the number of times a user will see that ad during a day or the campaign lifetime.

Brand Safety and Protection: This feature ensures that ads dont appear on dubious websites; advertisers can either target premium websites or apps or blacklist websites and audiences that can be detrimental to the campaign performance.

5. Access to Premium Inventories

DSPs are connected to a large number of ad exchanges, SSPs, and networks that enable advertisers to connect with audiences around the world. Advanced integrations such as mobile inventory integration further increase the reach.

6. Campaign Management

The campaign management feature allows brands to manage all campaigns and their budgets through a single interface. Advertisers can maintain a repository of their banners and creatives using the creative management tool.

7. Real-time Analytics

Real-time analytics lets brands and advertisers measure the campaigns performance in real-time. The data is presented in a visual format for the ease of comprehension. Although advertisers don’t act on a whim despite the availability of real-time data, by observing outliers or poor performing factors, they can take corrective measures as soon as possible.

Top 5 Examples of a Demand-Side Platform

examples of a dsp

One of the most commonly asked questions about DSPs is about the availability of open-source demand-side platforms. Although open-source DSPs are difficult to find these days, a great alternative to them is a white-label DSP solution. You can use a white-label DSP to build your DSP.

In this section, we will look at a few demand-side platform examples. Some of the DSPs mentioned here also offer a white-label product.

1. Epom DSP

Epom is a self-serve DSP that provides more than 30 targeting options. Apart from the traditional options, advertisers can target users through domain URL, app name, language, OS version, carrier code, etc.

The Bidding Autopilot feature helps advertisers optimize their campaigns by displaying ads on websites that take them closer to their advertising goals.

Advertisers can run banner, video, native, push, and pop-up ads through Epom. It offers a white-label DSP that you can use to improve their media buying efforts.

2. Pocketmath

Pocketmath, as the name subtly signifies, is a self-serve mobile DSP. With an average bid response time of under 2 milliseconds, Pocketmath enables advertisers to access ad inventories in 250+ countries.

Pocketmath lets advertisers run device ID-based, trigger-based, and cart abandonment retargeting campaigns. Along with features such as budget pacing and pricing optimization, advertisers can set up automated rules to manage their ad campaigns. Pocketmath charges a 20% fee of their ad spend.

3. Amazon DSP

Advertisers can use the Amazon DSP to buy display and video ads programmatically. Amazon DSP allows brands to reach out to exclusive Amazon audiences on multiple devices such as mobile, desktop, and OTT devices. Advertisers can run their campaigns on the Amazon website and app, Fire TV, and websites owned by Amazon such as IMDb.

The DSP offers direct access to high-quality publishers through Amazon Publisher Services or the open exchange. The brand safety and traffic quality feature ensures the legitimacy of the traffic and doesn’t charge the advertiser in case of invalid ad impressions.

4. SmartyAds DSP

SmartyAds self-serve DSP offers omnichannel programmatic media buying. The DSP is integrated with ad networks such as Pubmatic, InMobi, Smaato, and AdColony. Advertisers can run banner, video, native, connected TV, push, and pop-up ads through SmartyAds DSP.

The geofencing ads allow advertisers to target users in the vicinity of their business. SmartyAds also offers a white-label DSP solution that enables brands, agencies, and advertisers to build a proprietary product without spending much time developing the RTB infrastructure.

5. MediaMath

DSPAdvertisers can run omnichannel ad campaigns through MediaMaths DSP. The DSP provides a unified platform to manage end-to-end programmatic campaigns.

MediaMaths targeting options ensure that ad impressions appear in a brand-safe environment, and ads aren’t served on websites that either yield no response or tend to be shady.

The Dynamic Creative feature allows advertisers to serve highly contextual and relevant brand experience across multiple channels.

Learn More: Top DSP Platform Companies and ComparisonOpens a new window

Closing Words

DSPs have circumvented the manual media buying process that was inefficient and consisted of negotiations between the advertiser and publisher with plenty of room for fraud and flaws. Their ability to bring together a vast pool of publishers, coupled with the introduction of accountability through analytics, has led to the adoption that we see today.

With customization opportunities, an ideal DSP allows advertisers to choose ad inventory on their own without bringing in any bias. However, considering the investment required, small businesses can opt for independent ad platforms to execute their advertising efforts.What Is the Architecture of a Demand-Side Platform5

Indrajeet Deshpande
Indrajeet is a Marketing professional with 6+ years of experience in managing different facets of Digital Marketing. After working with SpiderG - a Pune based SaaS startup, he is now ready to work as a freelance marketer with different SaaS startups helping them with marketing strategy, plan and execution. His love for old-school hard rock and metal music culminated in taking up guitar and starting www.guitargabble.com. He is studying Stoic philosophy, experimenting with productive habits and documenting the progress. Get in touch if you are keen to know how you can implement pro-wrestling tactics in your marketing, community building and storytelling
Take me to Community
Do you still have questions? Head over to the Spiceworks Community to find answers.