Programmatic advertising has been growing by leaps and bounds since the last few years. This advertising technology has brought the much sought-after transparency in digital advertising by automating the process of selling and buying ads through real-time bidding and thus removing intermediaries from the process. More and more advertisers are opting for this advertising technology that gives them access to seemingly infinite inventory across multiple publishers in real-time. Now, programmatic being a relatively new phenomenon, not many are habituated with all the jargon associated with it. Because of this, ad exchange and DSP are two terms that often get used interchangeably. In this article, we are going to discuss ad exchanges and DSPs and where these two are different.
An ad exchange is a digital pool of ad impressions that publishers and advertisers use to sell and buy ads respectively, through real-time bidding. This kind of automated digital advertising is known as programmatic advertising. Demand-side Platform (DSP) and Supply-side Platform (SSP) are two softwares used by marketers and publishers respectively to sell or buy ads. Publishers make the ad impressions available through ad exchanges and DSPs automatically decide which impressions an advertiser should buy, depending on certain attributes such as where they’re served, and which specific users they’re being served to. The ad exchange matches the targeting of the advertiser to the appropriate publisher inventory. An SSP is a software used by publishers to sell ads by connecting their inventories to multiple ad exchanges. Through real-time auctions, the highest bidding advertiser wins the impression.
Demand-side Platform (DSP)
As mentioned earlier, a DSP is a software used by advertisers and agencies to buy display, mobile, video and search ads in an automated way. DSP is an advertiser platform that enables buyers to manage multiple ad exchange accounts and data exchange accounts through a single interface. Advertisers do not need to manually negotiate ad rates with expensive and unreliable intermediaries. So, DSPs make the process cheaper and efficient for advertisers. DSPs allow advertisers to buy impressions across a range of publisher sites, but targeted to specific users based on information such as their location and their previous browsing behaviour. DSP lets them choose audience characteristics and then publishes ads according to those. So, brand marketers do not need o worry about picking the right website and the right niche to place ads. DSPs expose metadata of the inventory provided by the publishers and combined with 3rd party data validation, offer an authentic landscape of the target audience to choose from.
Ad Exchange vs DSP
Basically, an ad exchange is the technology platform that makes publisher inventory available for real-time bidding to advertisers and a DSP is the ‘bidder’ that bids for the impressions that match the advertiser targeting. The bidder i.e the DFP acquires the best possible inventory for the advertiser from the ad exchange. The DSP is the bid management software and the ad exchange is the platform where the bid takes place in real time.
EMarketer forecasts that programmatic spending in the U.S alone will reach $37.9 billion by 2018. Thus programmatic is here to stay and will continue to grow at a pretty high speed. So, it is important for publishers and advertisers to know the fundamentals of the technology for its seamless implementation. We, at Blognife, are here to help you through the process. We hope this article has been helpful and will make the concepts of ad exchange and DSP in programmatic come clear.