Found yourself lost in programmatic advertising acronyms again? You came to the right place.
Understanding the difference between DMP and DSP is crucial for anyone working in the field, as these are two of the most important tools used to manage and optimize digital advertising campaigns.
Or, in other words, serve your ads to the right people.
This post will help you better understand both DSP and DMP, learn how each of them works, the difference between the two, and what role they play in programmatic advertising.
What is a DSP in advertising?
DSP, or demand-side platform, is programmatic software that enables advertisers to buy advertising placements across various ad exchanges and supply-side platforms (SSPs) and manage digital advertising campaigns.
One of the key purposes of DSPs is to automate the process of buying digital ads, allowing advertisers to target specific audiences based on such data as demographics, interests, location, user behavior, etc., and optimize the performance of their campaigns in real-time.
Together with SSPs, which are used by the supply side (or publishers), DSPs are a part of the ad selling and buying ecosystem aimed at helping advertisers increase the efficiency of essential processes in online advertising.
Some DSPs may also offer integration with other marketing tools like customer relationship management (CRM) systems or – you guessed it – DMPs, which we will cover later in this article.
How does a DSP work?
For advertisers entering the programmatic space, a DSP is essential to reach the target audience efficiently.
How does it work?
- An advertiser has their ads ready and launches an ad campaign using a DSP.
- Somewhere on the internet, a user visits a website.
- DSP receives information about this user from the ad exchange/SSP (connected to publishers).
- Based on pre-set criteria, DSP bids on available ad placements on behalf of the advertiser.
- The highest bid wins, and the ad is displayed on the website.
What are the advantages of a DSP?
DSPs offer a wide range of benefits to advertisers, some of which include:
- Automation and efficiency. By automating the process of buying and placing digital ads, DSPs can save advertisers a significant amount of time and help improve their workflow. Moreover, using internal DSP features, advertisers can easier manage and optimize their campaigns to achieve better results.
- Cost-effectiveness. Using DSPs, advertisers can set their own budget and bid amounts, which can help them control advertising costs and get the highest ROI for their campaigns.
- Global ad inventory. DSPs give advertisers access to a wide range of publishers worldwide while working with a single provider.
- Advanced targeting options. Using a DSP, you can better control who sees your ads. It allows you to narrow your audience to the finest details, such as their socio-economic class, devices they use, when they’re the most active, demographics, and many more. This can help you reach the right people and increase the chances of conversions.
- In-depth reporting and analytics. Once the ad campaign is done, advertisers can access reports, evaluate the performance, and gain valuable insights for future campaigns.
What is an example of a DSP?
- Eskimi: A full-stack programmatic advertising platform that advertisers and agencies use to reach and engage their audiences globally. For over 16 years, Eskimi has been operating in a number of countries in Europe, Africa, and Asia, where brands successfully use unique rich media creatives, advanced targeting, in-game advertising, and premium ad-ops services.
- Adform: Founded in Denmark in 2002, Adform is one of the best-known software for digital advertising that helps advertisers and agencies buy and optimize digital ad campaigns across various channels, including display video, mobile, and social media.
- AdRoll: A marketing and advertising platform focused on helping e-commerce brands grow revenue and save time. The platform enables thousands of D2C brands to run display, social, and email advertising campaigns using automation and personalization.
- DV360: Probably one of the oldest in the market (founded in 1996), DV360 is part of Google’s Marketing Platform, offering end-to-end campaign management features advertisers need, e.g., creative workspaces or automated bidding.
- Epom: Epom is a white-label DSP that you can customize for your needs and use for an effective advertising process. With Epom, advertisers can run display, mobile in-app, native, and video ads on their own terms.
What is a DMP?
DMP, or data management platform, is a system that helps brands and organizations collect, store, analyze, and activate data from various sources around the internet, such as websites, mobile apps, social media platforms, etc.
DMPs can collect first, second, and third-party data, which can help advertisers and agencies gain valuable insights into customer behavior and preferences, or in other words, see a full potential customer’s view.
Therefore, this can lead to a better understanding of specific target audiences, help make better business and advertising decisions in the future, and improve overall marketing and advertising efforts.
How does DMP collect data?
There are multiple types of data DMPs can collect (web and app data, data from ad campaigns, 1st, 2nd, 3rd party data) and several ways they can do it. It's important to mention that these are not universal and can vary from one service provider to another.
Generally, DMP collects data via:
- Server-to-server integrations
- Application programming interfaces (APIs)
To understand this process better, let’s take an internal Eskimi DMP as an example and go through the steps of how it collects data via JS tags in real-time:
- A user visits a publisher - website page (e.g., bbc.com) or an app (e.g., Viber). These apps and sites have ad slots that collects user information which includes, but it is not limited to User agent, geo location, IP, etc.
- The publisher sends the information to the SSP (e.g., Authorized Buyers, formerly Doubleclick). SSP identifies the user by using cookies and/or more data (e.g., Mobile Advertising ID).
- SSP adds user data with the ad placement data. From this information, SSP creates an ad signal.
- The ad signal is sent to different DSPs that compete for the ad signal in an openRTB auction that happens in miliseconds everytime the browser is loaded/refreshed. The goal of any DSP is to win the auction and serve their advertiser ad.
- Eskimi DSP sends eligable data from the ad signal to the DMP which profiles whether or not the user is seen for the first time. If the user has been seen in the past, the data will be added to the historical data that Eskimi DMP has collected.
What are the advantages of a DMP?
Some advantages of using a DMP include:
- Data collection. The primary purpose and the key benefit of using a DMP is the ability to collect data from any source and store and organize it for future use.
- Audience insights and personalization. Collecting and storing data reduces the need to guess who your target audience is and enables brands to rely on real insights, such as behavior or demographics. This information is essential for creating personalized campaigns that have a higher impact.
- Enhanced marketing and advertising efforts. The data collected by a DMP can help brands better understand and anticipate the needs of their target audience. Using more precise targeting and showing the right ad to the right people can elevate their marketing and advertising efforts.
- Privacy compliance. Since data is stored in one centralized location, DMP makes it easier to ensure it’s handled in compliance with relevant regulations and laws.
Overall, using a DMP can help you make more informed decisions, better optimize advertising campaigns, thus driving better results.
What is an example of a DMP?
- Eskimi DMP: Used by Eskimi DSP to foster personalized advertising for Eskimi advertisers. Eskimi DMP collects and stores data that is received from 75+ exchanges that Eskimi DSP is connected to, enabling it to collect over 2bn. profiles.
- OnAudience: DMP that helps businesses of all sizes collect user behavior data from various sources and take full control of it.
- Lotame: A data management platform that allows everyone in the advertising ecosystem to benefit from data collection across all browsers, devices, and platforms.
- Adobe Audience Manager: A DMP by Adobe that helps businesses collect, activate, and analyze data from various sources to improve their advertising efforts.
- Oracle BlueKai: Formerly BlueKai, this DMP allows brands to unify and activate data to drive personalized campaigns across digital advertising channels.
DMP vs. DSP: 5 key differences
Although DMPs often go hand in hand with DSPs, those are two different tools that serve different purposes.
While demand-side platforms are used for effectively launching, managing, and optimizing digital advertising campaigns, data management platforms are used to improve them by collecting, storing, organizing, and activating relevant data.
2. Data collection
Both DSPs and DMPs collect and work with data; the difference here is data sources and the depth of insights you can get.
Since data management platforms are created for data collection and management (hence the title), these platforms can offer access to nearly unlimited sources, including web/mobile, CRMs, email and SMS data, search queries and social interests, third-party data, and more.
Put simply, all kinds of data you might need for marketing purposes.
Meanwhile, DSPs collect and store only campaign-level data (mostly third-party) needed for making bids.
3. Data segmentation
When it comes to data segmentation, it’s safe to say that a DMP is more universal than a DSP as it can serve everyone in the advertising ecosystem, i.e., publishers and advertisers. It means that both the supply and the demand sides can benefit from collecting data and using it for better results.
Moreover, it allows to segment the collected data into various user profiles following different segmentation rules.
In comparison, DSPs are used by the demand side only (advertisers and agencies), and the data they can collect is limited and focused on serving advertisers only.
4. Data management
Returning to the purpose part, we learned that DMP and DSP are used for different things. Data management is exactly what differentiates them.
Put simply, DMPs collect and segment data that DSPs later use to improve ad campaigns.
This data is often portable, and you can export it to multiple DSPs or even other DMPs. Also, DMPs can handle large sets of data from various sources, while DSPs can best function using the information that a DMP provides.
5. Use in programmatic campaigns
Both DMP and DSP are used to run programmatic advertising campaigns, although only one is a must for launching ads.
Without a DSP, you wouldn’t be able to participate in real-time bidding and access the data needed to start a campaign. It’s a platform that connects advertisers to publishers, and to be able to buy placements programmatically, you must be a client of a DSP.
Meanwhile, not having access to a DMP wouldn’t stop you from launching your ads. It’s a valuable and necessary addition, but you can still begin a programmatic campaign without it.
Using DMP and DSP together for the best results
Programmatic advertising connects multiple tools that, when used together, can result in better-tailored, therefore, more profitable campaigns. DMPs and DSPs are just a couple of them.
Working simultaneously, these integrated systems can use data from different sources and help advertisers reach customers in the most efficient and effective manner.