Ads seamlessly integrated into the Facebook Feed, carefully customized to each user’s usual content.
Instagram story ads popping up naturally as you swipe through your friends’ stories.
Acquiring digital ads today is arguably much easier than it was in the past. With the exponential rise of technology and the increasing digitization of companies worldwide, the process of buying and selling ads has become simple, quick and efficient — but also competitive. And, as someone who invests in AI across vertical markets and has one demand-side platform (DSP) in their portfolio, I believe DSPs are at the forefront of this revolution.
DSPs are among the most widely used platforms and tools that I see advertisers rely on to manage their online campaigns. Throughout this process, advertisers typically have the ability to buy impressions across a wide range of publisher sites — and these impressions are highly targeted to users through AI based on their previous online behaviors, preferences and actions. These ad impressions, which publishers provide, then appear in market spaces known as ad exchanges; it is the DSP technology that makes a decision about which available impressions should be sold to advertisers. The prices of the impressions are also determined in real time via bidding.
So how does the process work?
At the core of it, the advertiser usually supplies the content and design, as well as a detailed breakdown of their perfect target market and their budgeting limitations. Upon receiving this information, in turn, the platform identifies advertising opportunities and recommends ad spaces that reach the largest possible audience at the lowest price for the described target market. Eventually, the DSP technology proceeds to “reserve” those ad spaces by purchasing them until it reaches the assigned budget ceiling.
For years, the traditional view of digital marketing and advertising was closely associated with networks such as Google, Facebook and Bing. However, DSPs may come to redefine what digital advertising is seen as today: One report (via Global Newswire) found that the DSP market could grow at a combined annual growth rate of 30% between 2020 and 2025.
Unlike the most popular independent networks that allow advertisers to buy ads and ad space on their proprietary platforms, one MarTech Advisor article explains that DSPs typically allow advertisers to buy search, display, mobile, video and native ads from multiple sources through a single interface.
You might ask what the point is if both are offering the same value. The truth is, while the offering might be very similar, the systems are vastly different.
One of the starkest differences is the level of control the advertiser has. With DSPs, advertisers have the ability to manage the buying, optimization and analysis of their ads through one interface — in contrast to the traditional networks that may have a much more limited set of features. While traditional networks have standard formats and default segments that advertisers rely on, DSPs generally offer the freedom of targeting customers on a highly personalized level.
With DSPs, there is a wide range of criteria that advertisers can draw “inspiration” from in their efforts to reach a specific audience. In general, DSPs provide a number of capabilities for their client advertisers. When you’re choosing a DSP, consider whether it offers any of the following features you may need:
1. Geotargeting: Does the platform allow you to target an audience based on available information about their location?
2. Demographic Targeting: Can it target based on data such as age, gender, ethnicity, education and income?
3. Behavioral Targeting: Does it use AI and machine learning to target users based on their interests and behavioral patterns online, such as website browsing habits and online shopping history?
4. Contextual Targeting: How well does it strategically position ads relevant to the website or mobile app content, URL or website category?
5. Device Targeting: Can it target based on the exposure of ads to users on specific devices or operating systems of the advertiser’s choice?
6. Retargeting: Can it target users who have previously visited a website before? This feature allows you to reposition ads to reengage potential customers.
Additionally, how does the platform use AI and optimization algorithms to identify the most appropriate ad spaces for the impressions that match the advertisers’ expectations in terms of budgeting? For instance, The Trade Desk DSP has reportedly already begun introducing AI technology to its bidding process to evaluate as many data points as possible to find the most effective outcome for a particular advertiser. And Sizmek’s DSP uses AI in its recommendation and optimization engine.
There are a few other factors to consider when you’re choosing the right DSP for the business. Naturally, it might be tempting to immediately go for the platform with the widest reach, but while in theory that sounds like a good choice and a unique selling point for many DSPs, the scopes of their reach may not differ very significantly. Instead, it’s important to account for the efficiency of the platform in the first place. In this aspect, the platforms that have been operating for a longer period of time may have developed more tools to minimize the number of optimization processes they run. While the technology itself is not as established as, for example, Google AdWords, those that have been operating for longer likely have a better approach to meeting the unique needs of their advertisers.
But DSPs aren’t a one-size-fits-all solution for every company. Companies may need a DSP more when they operate with relatively larger traffic volumes and need a single platform for complete control. As of today, DSPs may not be necessary for smaller, less established and less digitized companies with lower traffic flows.
In an age where digital marketing has already increasingly become a nuisance in some ways due to limitations like those on third-party cookies, DSPs have a solid chance of sticking around and revolutionizing online marketing. Businesses large and small should look for DSPs that can better reach their desired audiences and increase the positive response rate across customer touch points. They should also look for flexibility with targeting and the ability to work within your budgetary constraints — and still optimize for the maximum ROI in the process.