iMedia Connection

Demand-side-platform myth busters

Ajay Sravanapudi

In just a few short months, the term demand-side platform (DSP) has become ubiquitous in the online advertising industry. It has become synonymous with all things real-time bid, exchange-sourced, display advertising -- in many cases replacing the mainstay term "network" as the model of choice for advertisers. All kinds of media brokers are now scrambling to offer a DSP solution, relegating words like "network" and "optimizer" to the dustbin of display terminology. 

But as more platforms wade into the opportunity waters, it seems like an equal amount of fog is being injected into industry discussions. So I thought it would be an opportune time to lift some of that fog and expose several of the bigger DSP myths being perpetuated today.

Myth 1: DSPs are really just networks in disguise

False. There are some real differences between DSPs and networks, but recent trends have blurred those lines and given birth to this popular myth. At a fundamental level, traditional networks rely on a large stable of direct publisher relationships to deliver premium placements, easy reach, and ample scale, while owning the media risk and performance responsibilities. Many of these traditional networks live on today amid the DSP wave, successfully delivering campaigns along the way. But networks have begun to rely on exchanges as easy aggregation points for quick scale, and that is what started the move to DSPs. Then when the networks began to layer on automated optimization and advertiser-facing controls alongside their exchange-sourced media -- either managed or self-service -- they started to look like a lot like DSPs. This is how the whole DSP phenomenon began to accelerate. As networks began to rely heavily on exchange-sourced media while automating the trafficking process and exposing levers and knobs to the advertiser, some essentially became demand-side platforms. With the scale of the real-time bid exchanges and external facing controls, yesterday's traditional ad network becomes today's "hot" DSP. But there aren't going to be as many DSPs as ad networks -- read on for why.  

Myth 2: DSPs will make networks obsolete

False. It will remain so until all available inventory is transacted on the exchanges. That said, DSPs are creating a "sofa bed" problem (neither a sofa, nor a bed) in the network business. At one end are networks -- and publishers in some cases -- delivering high-value inventory perhaps with custom or innovative creative. At the other end is the pure performance network that shoulders the media risk and runs cost-per-action performance campaigns. In this scenario, the exchanges are a fabulous source of cheap inventory for the performance networks. In the middle of this are the networks with a rapidly eroding publisher base. It is these networks that are in the greatest danger of obsolescence.

Myth 3: Using a DSP means you get brand-safe campaigns

False. It seems like brand safety is being treated like transparency in our industry. Everyone offers it in one form or another, but like transparency, brand safety means different things to different organizations. Just like transparency, everyone defines brand safety differently. There is one thing that separates effective brand safety from all the other forms of impression analysis and delivery verification out there today: preemptive filtering. Is your flavor of brand safety truly preemptive? Or is the "brand safety" you are getting really just post-impression analysis? Is it reactive?

Automatic brand safety is another of the industry myths perpetuated by networks rushing a DSP to market. Real brand safety, meaning a demonstrably safe environment for a brand advertiser to promote its message online, comes from truly preemptive brand safe filtering. But in practice, pre-impression analysis for relevance and safety is difficult to do. Evaluating a billion impressions a day for applicability takes a robust platform and intelligent integration with all of the real-time sources -- and this requires investment in technology and people to do it right. But preemptive filtering pays huge dividends in efficiency and thus returns. With truly preemptive brand safety, you only buy what is safe and there is no waste. No wasted targeting, optimization, time, or ad-spend.

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Myth 4: There are dozens of DSPs today, and there will soon be hundreds more

False. There is no shortage of organizations claiming to be a DSP. But you can count on one hand the number of solution providers able to deliver a truly successful DSP campaign (perhaps even minus a couple of fingers). In the heyday of networks, there were reportedly more than 300 ad networks out there, but few had a significant amount of their own proprietary technology. It is the large, technology-rich networks that have successfully transitioned to become real DSPs. The rest are scrambling to rely on relationships for their technology, as they had little or no technology of their own to expose when the DSP tsunami hit our industry's shores. Because of the technology required, there will be far fewer successful DSPs than there were ad networks. Dozens? Maybe somewhere down the line. Hundreds? No way.

Myth 5: DSPs are a fad and will not have real staying power

False. Far from a fad, the DSP trend is about control, efficiency, and profitability. Advertisers never wanted to outsource all of their control; they did it for the quick scale and reach that networks provided. Now that the exchanges have matured and have exposed real-time bid APIs, control can move back to the advertisers, while retaining all of the scale and reach that networks can offer. Once we go down this road, there will be no turning back. The DSP trend is causing a fundamental change in the nature of how display media is used.

With any significant new trend, there is bound to be some confusion. Hopefully this clears the air around some of the more prevalent myths in our industry. There are sure to be more myths and many different viewpoints, but this is a start. What is certain is that the trend toward the self-service DSP model is going to have some staying power. It has already made an irrevocable impact on how display media is brokered and continues to drive upheaval. It was way back in 475 BC that the Greek philosopher Heraclitus said, "The only constant in life is change," and those words are just as true today. The display advertising industry has gone through constant change since Hotwired ran the first banner ad in 1993, and the nimble organizations will be the ones that continue to flourish.

Ajay Sravanapudi is founder and CEO of LucidMedia, an online advertising demand-side platform (DSP).

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