DMP vs DSP: Everything You Need to Know

Publift
May 6, 2022
May 6, 2022
DMP vs DSP: Everything You Need to Know

No matter how brilliant an ad might be, if it isn’t seen by the right target audience then its tangible value will be limited. Demand-side platforms (DSPs) and data management platforms (DMPs) help digital marketers to both identify potential customers and then show them the right digital ads.

Both platforms are part of the programmatic advertising landscape, which consists of a number of software solutions designed to streamline and automate the purchase and sale of ad inventory.

With the global digital advertising market projected to grow from $178.6 billion in 2021 to $208 billion in 2022, it makes sense that advertisers and publishers should be looking for ways to maximize return on ad spend (ROAS) and ad revenue respectively.

Programmatic advertising uses different tools and software — DSPs, DMPs, ad exchanges, supply-side platforms (SSPs), etc — to automate each process in a marketing campaign.

Read on to find out more about DMP and DSP, and how they differ from one another, as well as how and when you can benefit from them.

What Is a DSP?

A demand-side platform (DSP) is an ad tech software solution that allows advertisers or ad buyers to automatically buy publishers' ad inventory.

This system helps media buyers make accurate bids based on customer data in a matter of seconds by connecting with ad exchanges and publishers’ supply-side platforms (SSPs).  

DSPs obviate the need for buyers to negotiate directly with publishers for ad space, which can be an inefficient and costly way to arrange such deals.

For example, let’s say you have a software company that uses a DSP to buy ad space. The DSP will identify users looking for software similar to your own through their online behavior, such as Google searches, recently visited software websites, ads clicked, etc.

When users visit a new page, your DSP will communicate with the supply-side platform (SSP) and automatically buy the ad space of that page to show them your ads. This leads to a better chance of sales owing to relevancy.

A DSP works in two stages. First, the advertiser uploads their ad on the platform and specifies the budget and target audience. Once the ad is uploaded is complete, the DSP scans through publishers’ platforms across the network and makes a suitable bid.

When To Use a DSP

A demand-side platform (DSP) can play a crucial role if you’re looking to promote your goods or services to a niche audience. Since a DSP bids for ads based on user behavior, the chances of conversion are higher.

Which would you rather, to show an ad to somebody interested in similar products or to someone with zero interest?

DSP advantages: 

  • Real-time bidding: A DSP not only provides advertisers with access to digital ad space but also places bids in real-time. Advertisers can also track their ad performance in real-time.
  • Accurate targeting: A DSP collaborates with other platforms, such as a data management platform (DMPs) and a supply-side platform (SSP) to identify visitors who are most likely to engage with an ad campaign. This ensures rapid and accurate targeting, increasing the chance of audience engagement with your ads.
  • Precise Budgeting: Real-time bidding on accurate targets minimizes ad spend waste and helps increase return on investment (ROI).

What Is a DMP?

A data management platform (DMP) is an ad tech tool that stores, organizes, and activates user data.

A DMP deals with a range of raw audience data, including first, second, and third-party data, collected through various sources across the digital ecosystem. A DMP is a platform that all the other ad tech platforms rely on when it comes to campaign data.  

When To Use a DMP

A data management platform (DMP) plays a crucial role in programmatic buying, as the process isn’t possible without data.

DMP advantages: 

  • Data Collection: A DMP helps to gather, sort, and store first-party data for future use. After gathering data from sources such as websites, apps, forms, emails, and lead magnets, the platform sorts and simplifies it into an understandable format. 
  • Audience Building: A DMP helps combine first-party data with second- and third-party data to build a broader audience group profile. This is useful in helping to identify new audiences.
  • Audience Insights and Profiling: With DMPs, advertisers can have detailed audience insight, including behavior and changes in shopping patterns. They can then plan future campaigns and forecast more accurately.
  • Personalization: People are more likely to buy from a business that offers a personalized experience. As such, digital marketers should consider DMPs as a means of personalizing their marketing strategies.

Key Differences Between DSPs and DMPs

Although both demand-side platforms (DSPs) and data management platforms (DMPs) are important digital marketing tools, they are both quite different.

While DSPs help advertisers engage in real-time bidding for the most appropriate ad space, DMPs provide customer data that facilitates the marketing process.

Let’s have a closer look at how they both work.   

Primary Roles

Demand-side platforms (DSPs) serve to manage online digital ad campaigns. Data management platforms (DMPs), meanwhile, deal with raw data collection, segmentation, simplification, and activation.

Data Collection

Both platforms work with and collect data. However, demand-side platforms (DSPs) only collect data required for making bids. Data management platforms (DMPs), on the other hand, are specifically designed for full-spectrum data collection and use. 

DSPs generally communicate with other platforms and publisher sites, and collect campaign-level data, which is mostly third-party data. DSPs generally don’t deal with first-party data.

DMPs collect data from various sources around the web that could range from first-party data from web pages and apps to second-party data from data partners, and third-party data from paid sources. 

Data Ownership

Because a DMP collects and stores data in its own domain through various sources, the owner of the DMP account also owns the data. However, this is not the case with a DSP, which often works with third-party data providers.

Data Segmentation

A DMP is useful for all parties in the ad ecosystem when it comes to segmenting data. It communicates with supply-side as well as demand-side software to allow them to use customer information for their particular purposes.

A DSP is specifically built for the demand-side of the digital ad ecosystem and handles data with that purpose in mind.

Use in a Programmatic Campaign

Though both platforms are crucial for any programmatic campaign, you do not necessarily need a DMP to begin one. It can, however, be useful to have access to one.

A DSP is necessary to begin a programmatic campaign. Without a DSP, you can’t access external digital data and participate in real-time bidding.   

Data Management

A DSP does not manage data since its major role is to facilitate advertisers make effective media purchases.

By comparison, a DMP is built to collect and manage data. With a DMP, you can access user data at your convenience. Data management is one of the key differences when it comes to analyzing DSP vs DMP.

Final Thoughts

Data has become a game-changer in digital marketing and knowing how to make the most of it is now critical. Collecting data from different sources is one thing, but using that data to plan your next ad campaign is another entirely. 

Similarly, as automation and technology have taken over the process of digital marketing, making the best use of available tools has become crucial for today’s advertisers.

DMPs and DSPs both offer strategic benefits that grow when combined with one another in a marketing campaign. 

Publift helps digital publishers get the most out of the ads on their websites. Publift has helped its clients realize an average 55% uplift in ad revenue since 2015, through the use of cutting-edge programmatic advertising technology paired with impartial and ethical guidance.

Contact us today to learn more about how Publift can help boost your ad revenue and grow your business!

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