What is a Demand Side Platform?
A DSP is a system that allows a user to buy advertisements across different platforms in realtime. In other words, it is a platform that allows buyers to manage media purchases — from different accounts or platforms — in one place. DSP’s use algorithms to offer buyers a range of media purchase options based on filters.
How a DSP works
It brings ad options to one interface
A Demand Side Platform brings together advertising options to one interface. It allows buyers to manage their advertisement purchases all in one system. Much of the purchasing is done through realtime bidding. Using a DSP, the buyer can manage their bids and pricing all in one place. DSPs do not own the ad space, but rather offer the platform that different media outlets can sell their ad space on. It's a virtual market for ads.
Its got options
DSPs offer all kinds of options to media buyers. Buyers can filter ad options based on Key Performance Indicators, like effective cost per click and effective cost per action. DSPs can also be used to serve ads, track ads and optimize ads, in addition to realtime bidding. The advertisements sold come in various types: video, mobile, search, display and more.
It is data driven
DSPs help buyers reach their target audience by analyzing data. A DSP with a complex algorithm can help a buyer find the ad space, or combination of ad spaces across platforms, necessary to target the exact audience they want to target. DSPs also know how to retarget audiences that aren't clicking "Buy". They track window shoppers and retarget them, in an effort to convert them to buyers.
Why a DSP matters
They simplify advertising
Bringing all of the above components together in one place is the innovation that is a DSP. Previously, buyers had to go to different places to buy or track their advertisements. Now this is all done more efficiently on one platform.
They help buyers target audiences
As stated above, DSP's are designed to help target audiences. The realtime tracking of advertisements and audiences mean the platforms are constantly at work optimizing the advertising strategy for a buyer. This is work that a buyer does not have to do, or could not do as effectively even if they tried. This frees a buyer up to manage more advertising or explore new ad opportunities.
They are efficient
Buyers used to have to do a lot more legwork to learn their ad options and track the results. The DSP is doing much of that work now. It gives buyers more options than they had before and it frees up their time to do more buying, strategize, or complete other work on their plate.