Demand-Side Platforms: A Critical Component of Real Time Bidding
Despite the challenging economic conditions in the second half of 2020, analysts forecast that programmatic ad spending in the US will grow at a rate of 6.2%. Programmatic advertising currently makes up 84.5% of all digital display ad spend.
Programmatic advertising is growing so rapidly because businesses have seen the incredible advantages it gives their marketing strategies. Wouldn’t you like to know the secret of this tool and put it to work for you?
Demand-side platforms within real time bidding are a critical component of programmatic advertising. Find out what they do and how they can give your business a competitive edge.
The Big Picture: Programmatic Advertising
Demand-side platforms (DSPs) and real time bidding (RTB) are components of the most common form of programmatic advertising. To fully understand how they work, it helps to have an overview of programmatic advertising. Programmatic advertising is the process of using technology to buy and sell digital ad inventory using automation and data.
Programmatic advertising started with display advertising. Video, mobile, and native ad formats now incorporate this data-driven marketing approach.
In the past, publishing an ad required manual insertion orders, meetings, negotiations, and contracts. You could wait days or weeks before you could publish your ad. Programmatic advertising makes the process of buying and selling digital ads faster, more efficient, and less expensive.
Development of Programmatic Advertising
The development of programmatic advertising goes back to the early days of the internet. The internet grew so quickly that publishers started to significantly outnumber advertisers. Publishers had a large amount of ad inventory that they had difficulty selling.
Remnant ad inventories were a publisher’s unsold or leftover ad space. Ad networks developed to categorize this inventory. Media planners could more easily access it and add it to their media campaigns.
Supply-Side Platforms
With the rise of ad networks, agencies had multiple channels to source ad inventories. The new selling process was more complicated for publishers. Publishers needed to manage who had access to their inventory for resale to agencies and advertisers.
Supply-side platforms developed to help publishers maximize their revenue.
A supply-side platform (SSP) serves as a layer between publishers and third-party advertising networks. It gives publishers control over their inventory. Publishers can specify how ads are sold and delivered to ad networks.
Demand-Side Platforms
Demand-side platforms emerged to help agencies and advertisers with buying ads. DSPs let buyers manage their media purchasing through a single platform. We’ll get into this in more detail later.
Real Time Bidding
Real time bidding is a key component of programmatic advertising. We’ll talk about this in more detail too. As a brief overview, RTB is like an auction. Advertisers bid to show specific ads to a particular audience based on data about that audience.
RTB facilitates the process of using data to serve impressions to a chosen audience.
Software and Tools for Programmatic Advertising
Programmatic advertising has grown rapidly. The number of ad tech companies, software, and tools within the programmatic arena has exploded as well. Some of the top programmatic advertising platforms include:
- MediaMath, which is popular among Fortune 500 companies
- TubeMogul (part of Adobe Advertising Cloud)
- Smarty Ads
- PubMatic
- Simpli.fi, which focuses on local advertising
- DoubleClick for Publishers and DoubleClick Ad Exchange (from Google)
- AppNexus
Each platform facilitates your programmatic advertising strategy. However, they each offer different options, pricing, and proprietary technology. The market continues to grow, creating an even more dynamic space for advertisers and publishers.
How Does Real Time Bidding Work?
As an advertiser, real time bidding is one of the most important parts of the programmatic advertising process. This is what lets you place a specific ad in front of your target audience.
RTB has three types of participants:
- Publishers/website owners/sellers (supply-side platforms)
- Ad exchanges
- Advertisers/buyers (demand-side platforms)
Publishers, ad exchanges, and advertisers each have a specific role in the process.
The Bidding Process
The publisher provides inventory to an ad exchange. When a user visits a website, a bid request goes to an ad exchange. The bid request includes data like demographic information, location, and browser history.
The ad exchange then passes the bid request on to its list of advertisers.
The DSP bids on behalf of the advertisers. Advertisers bid in real time for the ad impression. The advertiser who bids the highest amount wins the impression.
The value of the bid depends on the value of the impression. The advertiser sets these parameters within the DSP. The bidding process ensures that each impression sells at the highest price given the market demand in real time.
The entire process takes place within milliseconds. Before the page fully loads, algorithms determine which ad to show to the user so that the ad is served as the page loads.
Real Time Bidding Benefits All Participants
Real time bidding has advantages for advertisers, agencies, and publishers. The process increases efficiency and maximizes value.
Advertisers
Advertisers can target their ads more narrowly. You don’t waste impressions on the wrong audience.
Advanced techniques and tools let advertisers test, control, and evaluate campaign variables. You can view and manage the campaign in real time. This further increases the efficiency of your campaign.
RTB also lets you protect your brand by specifying where to promote your product or service. You can prevent your ads from showing on illicit sites.
Agencies
Agencies get more control over the performance of the ad campaign. This leads to more efficient spending, so the spending goes further. The agency gets better results for its clients.
Publishers
Publishers get higher revenue because advertisers maximize the value of each impression. Publishers also get more value from their remnant inventory. Advertisers bid on the audience data, which tends to increase the value of this inventory.
Demand-Side Platforms
Demand-side platforms let advertisers participate in real time bidding. A DSP is an automated buying platform. It allows advertisers and agencies to purchase digital ad inventory.
A DSP can help you buy display, video, mobile, and search ads.
DSPs are independent of individual networks. For example, if you buy ads with the Facebook Ad Manager, you’re buying impressions on Facebook or Instagram specifically. DSPs are third-party software that lets you analyze, purchase, and manage ads across multiple networks.
The DSP gives you all the information you need to buy advertising from a publisher. The DSP doesn’t own or purchase media directly from publishers. During the real time bidding process, it communicates with a supply-side platform through an ad exchange.
Many DSPs are available, but the top four platforms account for 90% of the market. A variety of pressures including privacy laws, the loss of third-party cookies, and problems with liquidity because of the COVID-19 pandemic leads experts to predict that the market will continue to consolidate.
Components of a Demand-Side Platform
A demand-side platform consists of several different elements. Different platforms may use different names for these components, but they all have a similar structure. This enables them to serve ads programmatically.
Integration with Ad Exchanges and SSPs
Using a DSP lets you reach more than one ad exchange and supply-side platform. The DSP integrates multiple supply sources, which consolidates and centralizes the process of buying ads. You get a wide cross-channel reach without having to negotiate with each source individually.
Other Integrations
DSPs integrate with a variety of tools that increase their functionality. Data management platforms, analytics platforms, and payment gateways are examples of these tools. DSPs also integrate with brand safety solutions to increase their risk management capacity.
Bidder
The bidder places bids on ad impressions during real time bidding. The bidder is arguably the most important part of a DSP. The RTB process is extremely fast, so executing bids as quickly as possible is critical.
Most DSPs use multiple data centers around the world. This helps to minimize latency during RTB.
Ad Server
The ad server delivers the necessary ad elements to the publisher’s website. It also tracks impression and conversion data. Ad servers detect fake ad inventory to prevent fraud.
DSPs can either have their own ad servers or integrate with external ones.
Budget Manager
The budget manager lets you define the budget parameters of the campaign. You can set things like the maximum campaign budget and establish rules for how to spend the budget.
Campaign Tracker and Reporting
A DSP gives you a wide range of data about the effectiveness of your ad. It tracks and records data like impressions, ad viewability, clicks, click-through rate, conversions, and ad spends. You get this information on a reporting dashboard in the DSP.
Effectiveness data helps you optimize your ad campaign.
User Profiling
DSPs also records data on each user who views an ad that the DSP served. The DSP builds a profile of visitors and places them in an audience segment. The profile consists of data about the type of content users consume, where they watch, and which ads they click on.
The database of user-profiles is another tool to optimize your campaign. It’s also valuable for remarketing campaigns. All of these components work together to make a DSP an efficient and effective way for advertisers to buy ads.
Demand-Side Platforms vs Ad Networks
Demand-side platforms incorporate many features that ad networks have offered, like access to a wide range of inventory and the ability to target ads.
However, a DSP lets you buy, serve, and track ads using one central tool. You can better optimize your campaigns. In fact, to remain competitive many ad networks now offer some type of real time bidding capability or DSP-like product.
Self-Serve and Full-Service Demand-Side Platforms
You can use either a self-serve or a full-service demand-side platform. If you choose a self-serve DSP, the advertiser’s team or their agency is responsible for the ad campaign design, execution, and reporting. The DSP is simply a platform the advertiser can use to buy ads.
A full-service DSP is more like an agency. A team in the DSP is responsible for the campaign from beginning to end. The advertiser accesses these services through an account manager in the DSP.
A self-serve DSP gives you more control over your campaign. You have more flexibility. A self-serve DSP is typically less expensive.
A full-service DSP is very convenient for the advertiser. The expert support and additional resources are especially useful if you’re new to programmatic advertising or using a DSP.
Demand-Side Platform Benefits
Using a demand-side platform gives you many advantages as an advertiser. You gain efficiency, reach, and precision.
Efficiency
One important benefit of using a demand-side platform is increased efficiency. If you’re managing campaigns across multiple networks, a DSP lets you adjust everything from a single dashboard.
The real time bidding process streamlines and automates the process of buying ads. It takes place in milliseconds.
Reporting and Analytics
DSPs give you access to a wide range of data. Many DSPs partner with third-party data providers. This information is often more than a single network would be able to provide. You can also usually import your own data from a customer relationship management or data management platform into the DSP.
The DSP’s own data includes things like ad impressions, clicks, click-through rate, and ad spend. Publishers provide information about users like demographic data and shopping history. DSPs also buy information from third-party data brokers.
Better data lets you target your ads more effectively. You gain insight into the psychology of why a user makes a purchase. The ads are more personalized and so are the post-click landing pages. Your visitors are more likely to convert.
You can see the performance of your ad campaign on your dashboard.
User Targeting
The data that a DSP collects about users helps you better target a specific audience segment. You can optimize your ad rotation and create a more effective remarketing solution.
Reach and Selection of Inventory
DSPs have access to the major networks and more. You have access to a high-quality, global inventory.
You can carefully choose where you want your ads to appear. This helps protect your brand.
Support
Finally, DSPs often have better support than a single network would offer. You get more than a simple helpdesk-style customer support system.
Putting Demand-Side Platforms to Work for You
Demand-side platforms and real time bidding, as part of programmatic advertising, give your business an edge. Navigating the process can seem complicated, but you don’t have to try to figure it all out on your own.
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Check out what sets us apart, and schedule a call with one of our marketing experts today.
