I recall the first time I heard the term "DSP." It was in a meeting with the Right Media team at Yahoo in New York in 2009, and the team said to me, "We now have a name for what you guys are!" and that term was DSP -- demand-side platform. I knew my company, XA.net, was not an ad network or an ad agency, and so our new moniker emerged, which seemed to describe something different from those well-understood models.
One of the key distinctions (to me at least) from a network seemed to be that the DSP would align its interests on the side of the buyer, and not the seller. In the intervening time, however, many companies have jumped on this term to call themselves a DSP, perhaps sometimes to overcome some negative connotations associated with being an ad network, to take advantage of newly focused attention in the space, or, in many cases, because they think it truly best describes what they do.
A demand-side platform is a technology/intelligence layer on top of display inventory and display-buying systems that makes media buying more accessible, easier, or more efficient. DSPs evolved as a response to a need by advertisers and agencies for more streamlined management of display media buying specifically within ad exchanges like the Right Media Exchange (RMX). These exchange systems were new and often difficult to use, and needed simplified interfaces. Luckily (in the case of RMX) APIs allowed campaigns to be created directly in their systems and reporting to be gathered without a human being having to log into those systems and use their complex user interfaces. DSPs and ad networks also started working with emerging data companies like BlueKai and eXelate, which wanted to offer data to media buyers without having to sell them media (unlike the early behavioral ad networks like Tacoda), and DSPs started to show they could help with that.
Then in 2009 the concept of real-time bidding (RTB), or "callout bidding," emerged, where instead of buyers designing a campaign in someone else's system, they would instead get a feed of information about specific impressions upon which they could then bid. With DSPs already focused on adding technology on top of media buying, many of them started to experiment with RTB and are now in the process of building systems around this still-nascent way of buying media. It eliminates headaches around managing lots of different audience pools for various exchanges and systems (instead, the real-time bidder gets the chance to match up users to their own database and then decide whether to buy the impression), but creates headaches of its own with new technology needs that many legacy technology platforms have seemed slow to adapt to.
Two business models and hybrids emerged thereof for DSPs:
- Selling a platform to aggregated media buyers/sellers (like agencies or networks themselves) as a software license model, on a CPM or some combo thereof
- Buying media on behalf of agencies, networks, or advertisers directly in an optimized way
Naturally as the needs of the market have evolved, DSPs have evolved too, and this has certainly created additional confusion. For example:
- A focus by many DSPs on enabling agencies to buy on ad exchanges or RTB has become augmented by some, allowing additional buying across publishers directly, streamlining buying workflow, and making some DSPs look a lot more like technology-powered agencies.
- Some have shifted from rabidly working only with agencies (so as not to threaten them) to include ad networks as customers, then to include advertisers they deem to have no preexisting agency relationships.
- Some DSPs have chosen to focus on performance-oriented advertisers (and perhaps even allowing CPA-based buying), while others instead relied on enabling agencies with technology for them to get additional cheap exchange impressions for brand campaigns -- many of which ad networks had previously supplied to them.
- "Agency trading desks" arose and have largely utilized DSP technology to power their media buying, instead of creating their own technology. Odd situations persist where some agencies are mandated to use these trading desks for buys but are still buying directly from DSPs and exchanges themselves.
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