July 9, 2024

DSP vs. SSP - Understanding Important Components of Programmatic Advertising

DSP vs. SSP - Understanding Important Components of Programmatic Advertising

The world of DSP and SSP is sometimes referred to as the “black box” of marketing and advertising. Many are familiar with the terms, but few people actually understand the technology that is operating behind the scenes. Today, we will explain how programmatic advertising works and more importantly, how it helps businesses achieve success.

Before we dive in, let’s understand some key advertising terms:

Audience Targeting: The ability to separate potential consumers into groups based on their demographics, interests, and other criteria.

CPC (Cost Per Click): The average price per click on an advertisement. 

CPM (Cost Per Thousand Impressions): The most common advertising measurement. CPM refers to the cost to display an ad unit 1,000 times.

Demand-Side Platform (DSP): An automated tool used by advertisers to purchase and manage advertising inventories from multiple sources.

Impressions: The total number of times an advertisement is seen on a website or app.

Programmatic Advertising: The buying and selling of digital advertising space automatically in a data-driven manner.

Publishers: Owners of digital media (websites, apps, etc.) where advertisements can be shown. 

Real-Time Bidding (RTB): Advertisers bid for ad space in real-time as impressions become available.

Supply-Side Platform (SSP): Software that helps publishers sell ad space on websites and apps. 

Why Programmatic Advertising?

Programmatic Advertising is the most effective form of advertising because it uses algorithms, Real-Time Bidding (RTB), and audience targeting to show personalized ads to the right people at the right time. RTB auctions each ad impression to maximize revenue and return. Meaning that you get your ads in front of your target audience at the cheapest price. Programmatic advertising is so effective that it will account for 91.3% of US digital display advertising in 2024, with $168 billion spent in the US alone. (Per EMARKETER.forecast.)

The two main components of programmatic advertising are Demand-Side Platforms (DSPs) for advertisers and Supply-Side Platforms (SSPs) for publishers. Throughout this blog, we will explore how DSPs and SSPs work together to make programmatic advertising the go-to for all digital marketers.

What is a Demand Side Platform?

Demand-Side Platforms enable advertisers to buy and manage ads across many websites and apps more efficiently. Here is how a DSP works:

First, you establish your audience. Essentially, you can tell the DSP who you want to reach with your advertising campaign. The DSP utilizes audience targeting to find the best websites and apps where your potential customers spend their time.

After your audience is established, Real-Time Bidding (RTB) comes into play. When someone who fits your target audience is about to load a webpage or use an app, the DSP quickly places a bid to show your ad on that page. This happens in real-time, within milliseconds.

The DSP then bids on your behalf, ensuring you get the best spots at the best prices. It learns and optimizes over time, making the next step to analyze performance. DSP’s have user-friendly interfaces and provide detailed reports on how ads perform, helping advertisers see what's working and what's not.

Following the process above, DSPs allow advertisers to reach their target markets, get the most out of their ad spend, and measure campaign success transparently. DSPs are extremely cost-efficient and allow for cheaper Cost-per-Click (CPC) and Cost-per-Thousand Impressions (CPM). 

What is a Supply Side Platform?

Publishers use Supply-Side Platforms (SSPs) to sell advertising space on apps and websites automatically. Essentially, SSPs automate the process of selling ad space. SSPs use Real-Time Bidding and inventory management to offer recommendations for the best match for each ad space at the right time.

Think of it like this: You have billboards all over town, and you want to rent them out to advertisers. Instead of finding advertisers to display on the billboards yourself, you use a service that brings relevant companies interested in billboard advertising right to you. 

Publishers utilize SSPs because they allow them to sell their advertising space faster, for more profit, and to a relevant audience. 

How do DSPs and SSPs work together?

Supply-Side Platforms and Demand-Side Platforms work together to automate the buying and selling of digital ad space. SSPs help publishers sell their ad space, and DSPs help advertisers buy it. Publishers use SSPs to list their available ad spaces for sale, advertisers use DSPs to find the advertising inventory, and RTB buys ad spaces that match their target audience. The SSP works with DSPs that represent advertisers. Advertisers use DSPs to find and buy ad spaces that match their target audience. The SSP holds a quick auction among DSPs when a user visits a site. The highest bid wins, and the ad is displayed in real-time.

An example of this would be a business who owns multiple websites. These websites all feature content focused on art. The traffic on those sites would essentially be people who love art. We can call this collection of sites an Art SSP. When someone who is interested in art visits any of those sites, the Art SSP holds a quick auction among the DSPs. The DSP’s bid to show their ads that would be relevant to art lovers, and the highest bid wins. This all happens in real-time.

SSPs and DSPs work together to ensure that the right ads will reach the right audiences, benefiting everyone involved.

How does Sports Thread utilize both?

Sports Thread is both a DSP and SSP. Our DSP allows us to reach heavily-targeted audiences across hundreds of thousands of websites and apps. Our SSP allows us to provide exclusive ad space to our clients that cannot be accessed through any other channels.

The utilization of our own DSP allows Sports Thread to have unparalleled reach through our DSP’s connection to Google, Sports Thread, and over 20 other SSPs. This allows for cheaper CPMs and CPCs when heavily targeting specific audiences.

By using both, we create the best value for publishers and advertisers. Our team of experts also work with you to have the best control of where traffic comes from and who sees it, ensuring high-quality ad placements. 

Learn how to maximize your ad spend with Sports Thread here.  

Written by: Courtney Kemna

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