Supply-Side Platform (SSP) and Demand-Side Platform (DSP) are two of the most important and common ways advertisers and publishers can manage the buying and selling of ad inventories.
If you can’t tell one from the other, no worries. This article will differentiate the two terms simply, and help you get a better understanding of their role in programmatic advertising.
First – what’s programmatic advertising?
Programmatic advertising is the term used to describe the technology that automates media buying’s decision-making process by targeting specific audiences and demographics.
Today, ad space is traded and bought automatically via ad networks and exchanges. To display ads on relevant publisher websites, one needs to select the target audience and set a bid.
The bidding process in programmatic advertising is called RTB (real-time bidding). Real-time bidding is essentially an auction where ad impressions are sold and bought, in transactions that take milliseconds to execute.
Programmatic advertising is extremely popular nowadays. According to Statista, programmatically sold advertising was worth 106 billion U.S. dollars in 2019.
Recap on Ad exchanges
Ad exchanges act as an online marketplace where advertisers, publishers, agencies, ad networks DSPs and SSPs can buy and sell their ad inventory, without any intermediate.
Ad exchanges use real-time-bidding technology to run auctions and sell inventory to the highest bidder based on impression-by-impression.
What’s a SSP?
An SSP (supply-side platform) is a programmatic software used by digital publishers. SSPs enable their users to manage and sell their ad inventory to advertisers at the highest possible price.
The SSP automatically offers inventory to multiple platforms such as DSP, ad agency, ad exchange, and marketplace sells it for the best price, helps to optimize website monetization strategy, and maximizes revenue.
Publishers can also set price floors (the minimum price a publisher will accept for an impression), create guaranteed deals, and define a wide range of very simple rules around which advertisers or buyers can (and cannot) purchase their inventory and at what minimum price.
What’s a DSP?
A DSP (demand-side platform) is the SSP’s counterpart on the advertiser side. Brands, agencies, app developers, and pretty much anyone that wants to advertise digitally, can use DSPs to set up their ad campaigns.
Before DSPs, selling and buying ads were handled by salespersons, which made the process long and costly. DSPs made the process easier and cheaper by automating the process and reducing the human resource required because the process doesn’t need negotiation.
The DSP connects advertisers with multiple SSPs, ad exchanges, and networks, allows advertisers to buy impressions with a specific target audience, customize ads with specific parameters, and define their terms for maximum bids, budget caps, the target audience parameters, and their campaign goals.
Bonus – what’s a DMP?
A DMP (data management platform) is a piece of software that collects data from various sources, be it first-hand or third-party, and then organizes it to help marketers get better marketing results.
In practice, it is used to collect and manage web browser cookies. That usually helps target and segment audiences to improve marketing results.
Here’s what’s confusing you…
It is usually easier for us to imagine that advertisers are the ones ”giving away” their advertisements to publishers, to gain revenues from advertising. However, the correct way to look at these roles is that the publisher is the seller of ad inventory, and the advertiser is the buyer.
Essentially in advertising, the demand is for ad inventory, and not advertisements. The publishers are the ones supplying the demand by selling ad space on their websites.
A DSP portrays the “buyer (advertiser) aspect” of media buying while an SSP depicts the “seller (publisher) aspect” of it.
How do SSP and DSP work together?
- A user enters the website.
- The website sends a request to ad exchanges and/or ad networks through the SSP. The SSP also provides information about the request, such as the known geographical area, age, gender, and interests of the user.
- On the advertisers’ side, once the brand decides who it wants to target with a particular ad campaign, it will feed this information through the DMP into a DSP.
- Bid requests are sent to DSPs. The DSPs will check the user’s data and determine what, and if, is the most appropriate purchase to reach the intended user.
- The highest bid from the offered options wins the auction.
- The website receives advertising from the auction winner and shows it to the user who has been targeted. RTB helped in the process by loading the targeted ad instantly.
What’s the difference between SSP and DSP?
Basically, DSP and SSP are the same thing for different users. The key differences between the two are:
SSP: used by publishers.
DSP: used by advertisers.
SSP: allow publishers to sell ad impressions for the highest price possible.
DSP: allow advertisers to buy ad impressions from ad exchanges and networks for the cheapest price.
How do they work?
SSP: Connects publishers with multiple DSPs. Chooses the highest bid to display on the ad placement.
DSP: Gathers data about users and places a bid offer on behalf of the advertiser according to how fitting the user is to the target audience. Provides different purchasing models like CPM.
SSPs and DSPs represent different sides of the same spectrum. Both of them were created to eliminate the involvement of the human factor in the process of digital advertising.
DSPs eliminated the need to negotiate ad rates and do things manually. And SSPs are a crucial figure in reducing the risk of publishers underselling their inventory.
I hope this article helped you gain some more insight into the world of programmatic advertising, and understand the differences between DSPs and SSPs.