If you're going to get the best out of ad performance, it pays to take some time to understand the programmatic advertising process - especially knowing the difference between a Demand Side Platform (DSP) and an Ad Network. For publishers getting started in the online advertising industry, there are lots of terms to get your head around.
In this article, you'll learn what Demand Side Platform and Ad Networks are and understand the difference between them for ad campaigns.
Let’s start with defining a DSP and an Ad Network in the simple terms.
Table of content:
• What is a Demand Side Platform?
What is a Demand Side Platform?
A Demand Side Platforms (DSP) is an online advertising technology platform used by advertisers in real-time bidding auctions for ad spaces.
Demand Side Platforms allow media buyers (who "demand" ad inventory) to buy ad inventory from multiple suppliers at the same time, such as publishers, ad networks, and ad exchanges.
The benefit of a DSP network is that it keeps all available suppliers in the one platform, which makes it really easy for media buyers to manage and optimise programmatic ad buying.
A Demand Side Platform is a fundamental tool in programmatic advertising, which takes out most of the human element in the auction. It works alongside the Supply Side Platform (which represent the ad seller, or publisher) to automatically match publisher inventory with a suitable ad unit according to the ad campaign parameters set by advertisers. This platform needs just milliseconds to deliver the impression and display results of the ad performance on a user dashboard.
Where did demand-side platforms come from?
They became the main competitors of ad networks in the 2010s, when programmatic advertising was introduced. They came about as a way to create the perfect setting for running multiple performance ad campaigns at the same time, without human effort.
DSPs are continuing to evolve, and now there are Mobile DSPs which are designed to help advertisers overcome the many challenges of mobile advertising - including working out how to deliver a message that is relevant and does not ruin the user experience of using a mobile app or visiting a website.
What is an Ad Network?
An Ad Network is a media company that sells ad inventory across a range of publishers to advertisers at a set price.
Think of the Ad Network as an intermediary between advertisers and publishers, or between DSPs and SSPs in programmatic advertising.
Ad Networks arose when advertisers wanted to buy online advertising and had to approach publishers and pay them directly for online ad space.
This process favoured large publishers with big audiences, because most smaller publishers were considered too small for advertisers to do business with. It was simply easier to go to the big publishers and reach more people.
That’s where Ad Networks came in.
Key Differences between Ad Networks vs Demand Side Platforms
Let's start by looking at the various benefits of a Demand Side Platform and Ad Network:
Demand Side Platform Benefits
Access to multiple inventory sources
The biggest benefit of a Demand Side Platform is it allows media buyers to buy ad inventory from multiple suppliers at the same time, including individual publishers, ad networks, and ad exchanges. The DSP network keeps all suppliers in one interface, which makes ad buying management much easier.
Programmatic advertising auctions let advertisers bid on inventory in a real-time environment. Advertisers can place bids on ad impressions and almost instantly get their ad campaign up and running with ads shown on publisher websites.
The benefit of this is that advertisers have more control and can make adjustments to their campaigns in real-time to continuously improve ROI without too much time lag. It's time efficient media buying.
Precise audience targeting
Advertisers can target their audience more precisely on a demand side platform, by applying custom filters and adjustments depending on the platform's features. Precise targeting options mean you can create custom audience segments within a plethora of publishers all over the world.
These extended targeting features, like the age, interests, and other user characteristics, are an effective way of ensuring media buyers do not waste budget on purchasing irrelevant impressions.
Set any bids
The real value of each impression defines its CPM, and advertisers are able to set any bids they want depending on what they think the ad impression is worth.
Demand Side Platforms make it much simpler for advertisers to manage buying of inventory from multiple data platforms, manage multiple ad exchanges and more, all with one easy interface. The media buyer saves time when compared to managing lots of media buying platforms or individual publishers.
By integrating multiple inventory sources (or publishers) into one platform, advertisers can tap into the benefits of better targeting and increased selection of device platforms for running ad campaigns, such as mobile advertising and more.
The best part of a DSP is that it doesn't just automate the bidding, but also automates everyday optimisation. Media buyers don't need to sit and babysit daily analytics and work out A/B tests and optimisations. The platform does to it all - it defines best-performing traffic sources and gives them a higher priority, while also blacklisting publishers that deliver poor results.
Better campaign reporting
Demand Side Platforms offer more transparent and smarter reporting capabilities, which is essential to run a successful advertising campaign. Advertisers can see real-time data around the performance of ad campaigns across multiple ad inventory sources in one interface.
More brand protection
Brand reputation is absolutely essential in digital advertising campaigns, and a demand side platform can help. Using Demand Side Platforms means the media buyer decides where their ads are displayed.
Ad Network Benefits
Access top-ranked and niche publishers in one place
Media buyers can choose from different types of ad networks depending on their goals, such as topic-specific ad networks, inventory-specific networks and premium ad networks for those global publishers with millions of daily visitors, such as CNN or The Guardian.
These top-quality publishers won't trust their inventory to SSPs or ad exchanges, nor will they sell directly to advertisers. Ad networks are the only way for media buyers to reach premium inventory and include it in their ad campaigns.
Pay for click and conversions
DSPs sell traffic for fixed bids, but ad networks are different. They can work on various pricing models, such as conversions, installs, and even clicks.
This means media buyers can optimise their budget and save dollars from low-performing traffic sources. Some ad networks offer media buyers two types of accounts: one for CPM/CPC ad campaigns (immersions and clicks) and one for CPI (installs) advertising.
Save time on set-up and optimisation
If you're out to save time, advertising networks are a winning option for time-efficient media buying. There's no need to spend days setting up ad campaigns or optimising performance when you run ads on an ad network.
Limitations of DSP
You probably need more than one DSP
In a world of data privacy regulations, most advertisers can’t afford to stop at one DSP. They all offer their own unique audiences, data and targeting capabilities. And if one goes down or changes something that impacts your business, you need to know that you have other options and won't lose out.
DSPs can be expensive to run
For all their benefits, demand side platforms can be quite expensive to run, so it only make sense to use one if you are spending at least a few thousand dollars per month on digital advertising.
DSPs can be complex
Learning the ins and outs of DSPs can take some efforts, so again it's only worthwhile if you're spending a substantial budget on programmatic advertising.
Limitations of an Ad Network
Lack of transparency
The biggest downfall of Ad Networks is the lack of transparency. The site reporting is often masked, which means advertisers cannot gain insight into where the media purchased is running, what was paid, and how their campaigns are performing.
Most DSPs provide full transparency at the impression level, which means advertisers can see the ad placement, types of audiences they are able to reach, and return on ad spends. The campaign data can be viewed on reporting dashboards or passed via APIs to other reporting tools for end-to-end performance visibility.
By contrast, Ad Networks don't offer this level of transparency. Impression tracking is limited, and advertiser cannot see real-time placement visibility because inventory is aggregated across multiple publishers before being sold. It's really hard to keep track of who displays your ads, and likewise for the publisher, it's hard to keep track of who buys your advertising space.
The other downside of Ad Networks is that all impressions cost the same regardless of the quality of the inventory. Inventory pricing is pre-set and fixed by the network. Advertisers pay a fixed price for impressions (CPM), clicks (CPC), installs (CPI), or actions (CPA) - no matter the value each impression brings.
More manual work
Unlike DSPs, the whole process is not automated with an Ad Network and you need to do more hands-on work. That said, ad networks provide users with a traffic manager, who sets up campaigns on the platform to save time on the ad campaign launch. The process can be a lot slower though, especially when you're dealing with hundreds or thousands of campaigns at once.
This is the opposite of a DSP where programmatic advertising automates the process between the advertiser and publisher. Everything from bidding to optimisations are done automatically by the platform using machine learning.
Pre-defined audience segments
Ad Network offer pre-defined audience segments and categories - great if you're happy using the pre-defined segments, but users cannot change or update them. This limited your targeting capabilities significantly.
On the other hand, a DSP lets advertisers target a list of specific users or target lookalike users. Then, advertisers can benefit from real-time changes to targeting audiences and serving personalised creatives specifically to those audiences.
How do you make the final choice of Ad Network vs DSP? It comes down to your goals. But if you’re even remotely considering moving to programmatic advertising, a Demand Side Platform is a must.
Advertisers get top-rate technology, the audience, performance tracking tools, brand protection, transparency and more.
It is more automated, with better efficiencies for cost and time - arguably the winning factor over Ad Networks. Where once Ad Networks were the ice for advertisers, programmatic advertising has evolved to a point where it's hard for advertisers to find the same ROI anywhere else.
However, ad networks are still evolving - they're not dead yet. Some have started offering real time bidding capabilities and other tools used by DSPs, such as audience targeting and impression capping. In short, they are becoming programmatic ad networks.
At the same time, many DSPs are buying up inventory and reselling it with added margins - just like Ad Networks. So long as they keep evolving, there's room for both DSPs and Ad Networks to co-exist and offer advantages to advertisers.