Ad Tech & Ad Ops

DSP vs DMP: Differences, Similarities, and Their Hybrid Model

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DSP vs DMP has become a common search term for both the buy and sell-side. Gone are the days when advertisers could call publishers and a deal was created by word of mouth. Most publishers and advertisers have now embraced programmatic advertising because it automates the process and helps earning in real-time. 

But automated technology brings the need for the use of various tools and techniques to better organize campaigns. Demand-side platform (DSP) and data management platform (DMP) are two such technologies that all members of the digital advertising ecosystem must be aware of. 

In this post, we cover demand side platforms, data management platforms, and the difference between the two.

What Is a Demand-side Platform?

A demand-side platform (DSP) helps advertisers and buyers in managing demand during a the real-time auction. 

Working of Demand-Side Platform

DSPs help advertisers in buying relevant inventory from the marketplace. They also help advertisers in staying abreast of upcoming auctions. Basically, demand-side platforms do exactly like supply-side platforms do for publishers. They help make advertisers’ work easy and efficient, thus helping them bag better deals. 

Advertisers need DSPs because they minimize some of the obvious flaws of traditional one-on-one deals such as:

  • Time-intensive process
  • Negotiation efforts
  • Limited audience reach
  • High cost of advertising, etc. 

How does a DSP Work?

The real-time bidding process occurs under a second but DSPs do a lot within this split second. It starts with a user visiting a publisher’s website. Advertisers have a campaign ready which targets a particular set of users. 

For example, the campaign involves users between 20-30 years of age who are planning on studying abroad. Once a DSP understands the campaign instructions, it starts contacting multiple ad exchanges for a target user. Once a user appears, the SSPs provide the ad exchange with the user data and if it matches with the campaign requirement, an auction is carried out with DSPs making a bid according to price floors set by the publisher. And that’s how an ad is displayed, helping both publishers and advertisers earn. 

Some of the best DSPs available in the market are MediaMath, Amazon Advertising Platform, LiveRamp, etc.

What Is a Data Management Platform?

Online advertising thrives on data, and rightly so. It is estimated that people are generating 2.5 quintillion bytes of data every single day. With such a massive amount of data being generated, publishers and advertisers are constantly looking for ways to assemble, store, and analyze this data. This has become increasingly relevant in current times when third-party cookies are dying a slow death. 

Data management platform
Source: Lotame

Data management platforms help publishers in managing, organizing, storing, and analyzing data that they gain through first-party, second-party, and third-party sources. They help automated organizing and devising actionable insights from data, which is otherwise a time-intensive manual process. 

DMPs help publishers in aggregating first and third-party data mainly for audience segmentation. This helps in selling their inventory better because getting a more relevant audience improves targeting of ads.

Also Read: Best Data Management Platforms: How Does the Future Look for DMPs

DSP vs DMP: Differences

DSPs and DMPs bear some similarities, which is where the comparison between them arises. However, both are used for completely different purposes, which we’ll clear now:

CategoryDemand-side platformsData management platforms
Used ByAdvertisers and buy-side partiesPublishers, advertisers, and many other intermediate parties
Purpose Only used for real-time bidding.Used for gaining actionable insights through analysis of data, audience segmentation, omnichannel marketing, etc.
Data CollectionDSPs collect data from only advertising campaigns. Their data collection is very limited.DMPs collect data from a variety of sources including CRMs, website forms, cookies, etc. There is unlimited scope for collecting data.
Data PrivacyConsumer data is not that well protected in a DSP as it can be further used for marketing campaigns for better reach. Data is well protected in a DMP. Only the owner of the data can use it for audience segmentation and additional analysis. 
Data PortabilityDSPs have very limited data portability and mostly cannot transfer data to other platforms.DMPs allow portability of data to other platforms such as SSPs, DSPs, etc. This happens because DMPs allow seamless integration with other platforms. 

What is a DMP-DSP Hybrid?

As far as media buying is concerned, DSPs and DMPs bear some similarities. This is the reason why digital advertising vendors have started selling a DSP-DMP hybrid model, as opposed to standalone platforms. 

To put it simply, a DSP-DMP hybrid has the combined capabilities of data management and media buying. This entity is powerful as it resolves the unnecessary requirement of investing in two different platforms. 

It might seem like the obvious choice for members of programmatic advertising to invest in the hybrid but it has its own limitations. Let’s compare and see how the DSP-DMP hybrid fares as compared to DMPs and DSPs.

DSP vs DMP vs DSP-DMP Hybrid Model

CategoryDemand-side platformData management platformDSP-DMP Hybrid
Data securityData is not that well secured because it could be used for other media campaigns.Security is unmatched as data is well-protected. This is especially the case in white label DMPs in which the owner has the sole right over that data.Security could be compromised because of vendors procuring third-party data for their own use.
Data management and media buyingCan only offer media buyingCan only be used for data related needs such as segmentation, storage, etc.Offers both data management and media buying. 

It is also important to note that pricing is also an important factor while choosing either the DSP-DMP hybrid or the platforms individually. The hybrid is less expensive as compared to the standalone platforms. 

Conclusion

At the end, it all comes down to the use case of an organization before they purchase a technology like the DSP, DMP, or their hybrid. If the primary goal is only data collection and audience segmentation, then choose a DMP. If media buying is the only end goal, then pick a DSP. If the objectives are clear, the DSP vs DMP debate could settle for any organization.


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