what is DSP and who should carry money there?

Despite the growth in market knowledge about programmatic advertising, there are still different opinions about what DSPs are and how to interact with them. And not all of these opinions are correct. So we propose to correct the understanding of the issue – at least in relation to those who read this article.

Let’s sort it out in order.

What is DSP

In the classical sense

DSP (Demand Side Platform, platform on the demand side) is an object in the OpenRTB protocol, with the help of which information is exchanged on the wrong side of the advertising market.

This object on its side has a source / sources of demand, i.e. advertising demand – advertisers. It is the DSP that generates responses with a rate to requests from the SSP (Supply Side Platform, the source of the inventory is sites, applications, etc., where visitors come in, who can be shown ads). The logic is as follows: for one request from the SSP, several DSPs make bids and an auction takes place, the ad of the winning DSP is seen by the visitor.

But now DSP in the understanding of advertisers and the advertising market as a whole has a slightly different meaning.

What is now, along with this, is called DSP

In order to better understand what exactly DSP means in the layman’s sense, let’s start from the very beginning.

A typical situation: an advertiser – a business owner, a brand ambassador and any other source of advertising budget – wants to run ads to bring customers to the company.

Along with context and targeting, one of the understandable types of advertising now is media advertising on the Internet: banners and video ads. More precisely, not only they, but for simplicity we will reduce to these two types. These ads are shown to visitors to websites, mobile applications, Smart TV viewers, and so on. It is about such advertising that will be discussed later in the article.

What does an advertiser do if he wants to run such an ad?

Option 1. If the budget is large enough, but there is no time and desire to figure it out on your own, the advertiser goes to an advertising agency that works with digital advertising, and it does everything on a turnkey basis, taking a brief and money from the advertiser. Selection of inventory sources and advertising services, planning, launching and optimizing campaigns, reporting – everything is done within the advertising agency. As a result, the advertiser receives the KPIs he needs – impressions or clicks, conversions to some actions on his website or specific sales in his business.

Option 2. It is usually resorted to if there is not enough budget to pay agency commissions. Also, this option can be chosen if there are already specialists in programmatic advertising in the state – although their presence is still rather rare. Be that as it may, in this case, employees in the advertiser’s staff begin to study various self-services for launching advertising – that is, those that make it possible to work without intermediaries. Usually they start with big ones: VK, Yandex, and earlier this list traditionally included services from Google and Meta*. They provide great opportunities for launching ads to the right audience: detailed targeting, a large number of formats, and a variety of inventory.

This is where the confusion starts. Are these DSP systems in the classical sense? Some yes. For example, Yandex can collect inventory from external SSPs using the OpenRTB protocol. But in the modern sense, these are large dependent systems without an individual approach. By individual approach, we mean the conditions for the advertiser, which are fully managed by the system. These include, for example, commercial benefits: cashbacks, changes in payment deferral terms, the possibility of full support or the ability to work with the account on your own, etc.

This is where we come to the well-established definition of DSP now – these are independent systems for buying targeted media advertising with the possibility of an individual approach to advertisers.

This is where advertising agencies or their contractors go in “option 1” described above – when they need to master the budget of an advertiser with the right KPIs. There are a lot of DSP examples on the Russian market: RTBSape, Getintent, Segmento, Mediasniper. There are also semi-dependent DSPs like OTM from Beeline or solutions from MTS.

How to build interaction with DSP

In different ways – and not always directly.

Small business advertisers – usually through an agency

There are three main reasons for this:

Typically, DSPs have high minimum budget requirements.
Such an advertiser usually does not have a staff of media buyers who can effectively use all the variety of DSP functionality. And there are really a lot of opportunities here, this is an absolutely professional tool.
Not all DSPs provide full-service in principle.

Advertisers from medium and large businesses – oddly enough, also usually through an agency

However, other reasons come to the fore here:

Larger businesses work with advertising agencies, as it is tactically and strategically much more profitable. Due to high advertising budgets, such clients are a tasty morsel for any agency, which means they can count on maximum attention to their campaigns and a good chance of achieving KPIs.
The agency may, and usually does, provide other advertising services. And, of course, it is easier and more profitable for large businesses to get them in the “one window” mode.
Agencies take on the problem of DSP selection, inventory, and other display advertising issues that are difficult to resolve without preparation. Lack of preparation can be partly addressed by hiring programmatic advertising specialists, but as already mentioned, this solution is often seen as more complex and expensive. In addition, the cost of a good specialist can be comparable to the agency commission.

But advertising agencies usually work with DSP, and not only with majors like the aforementioned VK and Yandex

And for them, this is the most logical solution:

Cooperation with DSP makes it possible to flexibly and profitably set up commercial conditions for all participants: margin changes in different areas, contract terms, and others.
Advertising agencies have either a staff of traffic managers or proven contractors who work effectively with the functionality of advertising systems.
When working with a full-service DSP, the agency can also build it in the most correct way and be an understandable intermediary between client KPIs and tool representatives to achieve them.

Let’s summarize

If you are an advertiser and want to launch an advertisement, it is easier, clearer and more efficient to do it through an advertising agency or through well-known self-tools from major players.

You should not mindlessly carry funds into a system that positions itself as a self-service DSP – it is quite possible that you will simply waste your budget.

DSPs that have a full-service may suit you – in fact, they can act as a mini-agency for you. One has only to remember that the arsenal of advertising agencies to achieve your goals is much more diverse, as well as the experience of achieving these goals for other clients.

*The Meta organization, as well as its products Instagram and Facebook, are recognized as extremist and banned in the territory of the Russian Federation.