Today’s post is a little technical.  We delve into some digital advertising tech talk.  If you’ve ever thought “WTF is a DSP and DMP?”, then trust me you aren’t alone. This little video explains the difference, but if you’d prefer a quick summary, keep reading!

In basic terms, a DMP is a Data Management Platform. It’s a piece of software that stores information (like a CRM does – Customer Relationship Manager) and has the ability to split data into ways that are useful for marketers and other businesses.

Essentially a DMP it is a database that has the ability to generate audience segments, which may be used to target specific audiences with online ads.

You might think: “how does a DMP link to getting an online ad?” This is where Demand Side Platforms (DSP) come into play. With the rise of advertising technology, marketers and advertisers use now have the ability to buy media across a range of different “places”, including DSPs. The types of online ads that can be purchased using a DSP include display (banner ads), video, search and mobile ads (and probably more).

Essentially, a DSP is a place advertisers can purchase digital advertising spots.

DMPs and DSPs are like two peas in a pod. Information is transferred from a DMP to its DSP in order to help inform ad buying decisions.

Without this link to a DSP, a DMP is not very useful.  Sure, it stores information but you need a DSP if you want to use that information to target your advertising to the audience you are chasing.

DSPs also make the process of ad buying much more efficient (and cheaper) by removing the possibility for human errors and the need to negotiate ad prices (because it becomes automatic).

A considerable number of DSPs providers are now offering their clients access to DMP technology too, as it is easier for marketers to use these platforms together.

Are you confused yet?

What is the difference between a DMP and DSP

You may wonder if or why you need a DMP?  Most agencies, publishers and marketers use DMPs.  You can either own one (they cost more than a house) or rent the information that someone else’s DMP has generated. Large agencies use this technology to collect data in order to specifically target clients with ads.  Sometimes but not always, they sell or rent the data to smaller agencies.

Many publishers are also begging to use DMPs to better understand their audience information and gain more value and insight.

Vendors currently selling DMP technology to the digital world include Aggregate Knowledge, Adobe, Krux, Lotame, CoreAudience and many more.  It’s likely you won’t have ever have heard of many of them.

Now you’ve probably got a good understanding of DMP but might still be a bit confused about how DSPs work. Long story short, DSPs buy impressions (ad views) across a range of publisher sites and places, but target this to specific users based on information such as browsing history or location.

Publishers make their impressions available from an ad exchange, which is basically its own marketplace. DSPs then compare the available inventory (what publishers make available) automatically decide which impression is most favourable. This all happens in real-time through a process called RTB (real time bidding). This takes place in milliseconds – faster than the time it takes to load a website page.

Most agencies and marketers are happy about the high adoption rate of DSPs as it allows the technology to do all the hard work for them cheaply, efficiently and effectively.

However, if you are a human buying ads, this might not be the case. Manual ad buying is phasing out; how can a human compare with the efficiency of a properly programmed computer?  The same happened with buying shares on the stock market. Publishers are making their inventory available through these DSP exchanges, reducing the need for manual intervention. Current vendors that sell DSP technology include Google’s Invite Media, MediaMath, DataXU (just to name a few).

I hope by now you have a good understanding of the difference between a DSP and DMP (and the advantages of using these two platforms together). For more information on this check out our video – it also includes some additional info about BDMs.

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