Demand-side platforms

Another buzzword in the online advertising business is ‘Demand-Side Platform’ (DSP). DSP is better understood in comparison with ‘pre-bought’. The new kids on the online advertising block are real-time bidding, impression scoring and DSP. These three point to buying inventory on the spot, as and when needed. This is in sharp contrast to pre-bought inventory where inventory is bought in advance and used over different campaigns as and when they come up.

DSPs are advertiser/agency facing systems that let buyers do self-service media buying from publishers; publisher aggregators and ad exchanges. A DSP’s key feature is that it enables real-time bidding against inventory. DSP allows buyers to spell out rules describing value of impressions based on audience attributes they have in mind. The buyer can, in a DSP, assign a dollar value to specific audiences and the DSP can bid on every impression based on its actual value to the advertiser.

The DSP usually bids across sell-side platforms, exchanges, and any publishers that directly support real-time bidding, and automatically optimize bids based on success and results. The result can be as simple as reaching 50,000 people that fall into a specific category — or it could optimize across CPC or CPA. Real-time bidding is vastly superior to other mechanisms when it comes to ensuring that the advertiser gets the best ROI. But there are some problems.

Many DSPs run out of real-time biddable inventory, meaning that their CPMs are rising because their supply is limited. A way out is for DSPs to participate in non-real-time auctions to make up impressions but value of being able to examine the impressions before being ‘bid’ is lost.

The long-term doesn’t look too gloomy though. Predictions are that lots of impressions will be made available. The cognoscenti in fact, even predict that eventually most impressions will be available in real-time!

Watch out for more on DSPs in future articles!