I have a new post at Ad Exchanger this week that tries to layout the definition of a DSP. Give it a read here.
Last week the folks at Admeld threw a tremendous event o
n the topic of Real-Time Bidding (RTB) at the Time Warner Center in NYC. There were hundreds of people in attendance talking about RTB, DSPs and our emerging space. One of the conversation topics that emerged was how to define the various terms, and in particular: What is a Demand-Side Platform? As someone who has been in the space since the very beginning, before we were even called DSPs, it was exhilirating to see enthusiasm from so many in defining what it is we do.
So, what is the proper definition for a DSP? As a technologist, my predilection is to focus on the technology innovations making this whole space possible, the most important being the advent of RTB. RTB has enabled a single platform to connect to multiple disparate inventory sources and make real-time buying decisions on each impression-by-impression. Buying decisions are thus powerfully transferred from the inventory vendor directly to the actual media buyer.
In the past, if this media buyer wanted to buy media, they would work with a provider like Right Media, ValueClick, Google or one of the tens of thousands of publishers and ad networks out there. Ad buys were achieved by either inputting rules-based buying instructions on various fragmented interfaces, working with an account rep, or using an API to communicate with an ad server. Once these buying instructions were defined, a provider would serve an ad, and make a buy, when an impression occurred on that particular network or site fit within the defined criteria. Buyers could then login to run reports, optimize campaigns or make minor tweaks and changes. Media buyers (and their clients) who needed mass impression inventory would have to perform this task over dozens, if not hundreds, of sources to achieve scale, since in this highly fragmented space no provider has a dominant share of the inventory. A big agency could work with as many as a thousand digital media vendors when you count the publishers, exchanges, ad networks, and intermediaries. Suddenly, buyers were logging into numerous interfaces, pulling and collating disparate reports and are left trusting dozens of black boxes to run their ads in the right places. Very simply, the fragmentation in the display space made digital media buying a nightmare. Moreover, the vendor was in control of where the ads ran, which inhibited transparency and targeting for the buyer.
RTB changes all this. Instead of each individual media buyer having to learn and rely on a incongruous collection of their vendors’ ad software, they can instead use a single DSP to manage buying all in one place. This single platform aggregates multiple inventory sources, making it possible to target very narrowly defined audience segments at scale using a single standard without fear of overlap. Buyers can now use data they have collected and developed about their customers‘ target users and communicate with those users directly as individuals. The modes of buying shift from targeting inventory sources to targeting individual users, and in turn, audiences.
This leads me to my definition:
At its core, a DSP is software for transparent automated media buying across multiple sources using unified targeting, data, optimization and reporting.
- A DSP needs to be able to connect to many different inventory sources to create a huge pool of inventory of tens of billions of impressions a day. Most likely this involves using RTB or some other solution where the DSP can see the impression without the requirement to buy it.
- The platform should make the final decision in real-time about which impressions to bid for and what price to bid for each. Platforms that buy media by sending instructions into another ad server in a non real-time manner are just an interface with very limited control and targeting powers.
- The DSP must be able to provide global frequency capping across all the inventory sources. Anyone who can’t provide this is most likely just sending instructions into another system and doesn’t actually control where the ads are being run.
- The DSP should provide unified optimization, analytics, reporting and impression attribution. This is one of the most valuable pieces to a good DSP.
The DSP should enable its users to leverage 1st, 2nd and 3rd party data across the entire pool of impressions. This means that clients should be able to map their user data, work with the DSP’s data and buy third party data. This data should be usable in highly complex multivariate targeting routines.
- A DSP should be completely transparent in all aspects of the media and data buying process.
There should be an interface that enables the buyer to manage all of their campaigns and transparently see costs, data, sites, conversions and impression attribution.
- The DSP should have cookie mapping and data sharing systems in place to enable integrations with third party data suppliers, agency data, analytics companies and client data. This process should be possible both on and off line.
- There should be no conflicts that would cause the DSP to do anything not in the best interests of its clients. This includes data, publishers, partners and exchanges.
- And last but not least, a DSP should calculate the value of each impression in real-time individually relative to the various characteristics of the impression. This process enables efficient and effective media buying.