4 min read

How is a Demand-Side Platform (DSP) Different from a Supply-Side Platform (SSP)?

Ad buying and selling have never been as easy as it is today thanks to advertising technological platforms like DSPs (demand-side platforms) and SSPs (supply-side platforms) that make programmatic advertising possible. With the help of these platforms, the supply and demand of digital ads have been consolidated through automation where the buying and selling of ads happen almost instantaneously in auctions that are quick, efficient, and streamlined. 

As the tactical part of launching an advertising campaign becomes easier, it can be tempting to throw the established creative process out the window and slap any old banner into a programmatic campaign. So while it's extremely important to understand the inner workings of the programmatic landscape, let's not forget that it's still critically important to deploy ads that are creative, well-written, polite, and in the best-case scenario, scroll-stopping, so that you can engage your audience. The best part, programmatic advertising exists for nearly every media channel, and that includes rich media and video.

So now, let's get into the specifics of how DSPs and SSPs work...

Marketers and digital advertising companies are increasingly using programmatic platforms to meet all of their advertisement needs. However, figuring out how these platforms work can often be quite confusing. Understanding these functions and how they perform can help identify how they differ from each other.

What is a Demand-Side Platform (DSP)?

A DSP platform is software in which advertisers and digital advertising companies can bid on and buy digital ad inventory, including video, display, and rich media inventory across different publisher sites. 

This entire process is quick and simple since it is all automated. Thanks to DSPs, advertisers and their agencies no longer have to contact hundreds of publishers to negotiate deals manually. Moreover, it also helps them find the best ad impressions using data to their target audiences, such as their age, gender, income level, and location. 

How Do Demand-Side Platforms (DSP) Work? 

The platform sorts through and identifies available ad inventory based on the advertiser's set parameters, while also taking into account previous browsing behaviors and ads that a consumer may have seen.

What is a Supply-Side Platform (SSP)?

This is an ad tech platform that handles the supply ad inventory, including our favorite, rich media ads. It is predominantly used by digital advertising publishers to sell a part of their inventory at a set price range through online auctions. 

By connecting their advertising inventory to an SSP, they have the ability to auction their unsold inventory by connecting to multiple demand-side platforms (DSPs). Compared to the selling of ads manually, SSPs are much better because in these auctions a single ad impression can be optimized for the best result.  This type of competitive pricing offers publishers the ability to optimize yield and maximize the revenue they receive from inventory.  

How Do Supply-Side Platforms (SSPs) Work?

Supply-Side Platforms work with DSPs to evaluate advertisers, set bidding ranges and rates, and identify which inventory is best for a specific campaign. SSPs allow publishers to filter ad placements to the advertiser's requirements and other criteria, considering things like premium environments and rich media formats.

Here are some of the processes involved in SSPs:

  • Real-time bidding by selling a publisher's ad space to DSP via ad exchanges
  • Determine which ad to connect to depending on the advertiser's requirements and the auction criteria
  • Provide relevant ads to audiences based on their geographical location
  • Streamline ad selling and delivery processes
  • Improve latency of ads that improves the overall real-time bidding process 

Critical Difference Between DSPs and SSPs

Now that you know everything about DSPs and SSPs and how each of them works, it's time to dive into the factors that differentiate them. Though both of them work together to help optimize the buying and serving processes of digital ads, particular distinctions between the two set them apart. Let's look at a few of those.

Usage of the Platforms

The simple yet significant difference between the two platforms is that two completely distinct parties use them. SSPs are used by publishers who want to sell their ads, whereas DSPs are used by advertisers who want to buy ad inventory.


Purpose of the Platforms

Essentially, DSPs are used to provide access to digital ad inventory, and SSPs are a means to offer up the inventory of many publishers in one environment


The Buying and Selling Process

DSPs allow advertisers to place ads at the most efficient costs. However, SSPs do the exact opposite. They enable publishers to sell their ad inventory at the highest possible value. The transition that occurs between these two platforms is called an auction, where the highest bidder on an individual impression earns the right to show their ad creative (ideally a rich media one) to the consumer at that moment.

 

Final Thoughts

As a marketer, it is important to understand the ever-evolving programmatic landscape and the difference between SSPs and DSPs. Though, we believe it is equally as important to pay attention to the advertising creative that you deploy in your programmatic advertising efforts. Because it's the ad, not the targeting or the auction, that the consumer sees.

If you are looking for a programmatic rich media partner to liven up your paid digital media, don't hesitate to get in touch with the PadSquad team to learn more about what's possible with programmatic creative.