What is a Demand-Side Platform (DSP): How Does It Work

Programmatic media buying helps businesses deliver ads to the right audience at the right moment. And that’s exactly what demand-side platforms (DSP) can ensure.

In 2024, the global DSP market size was valued at $75.26 billion. By 2034, it is projected to hit the mark of over $269.85 billion, which reflects a CAGR of over 13.6% for the period from 2025 to 2034. This impressive growth is driven by the increasing demand for such platforms and all the benefits that demand side platform marketing can bring. Let’s take a closer look at them in this article.

Source: MARKET RESEARCH FUTURE

DSP Meaning: What is a DSP?

This tool eliminates the necessity of negotiating with individual publishers. Instead, advertisers can fully rely on DSPs to manage bids, target audiences, and optimize ad campaigns in real time. All this is available from one central interface.

Today, DSPs play a crucial role in real-time bidding (RTB). These platforms can evaluate ad impressions practically in no time as soon as they become available on ad exchanges.

DSPs work in the following way:

1. When a new user opens an application or a website, a demand-side platform gets a bid request with anonymized data.
2. It estimates whether this user corresponds to the target criteria of the advertiser.
3. If the user matches the criteria, it automatically places a bid in real time. If the bid wins, the ad is shown to the user.

The entire process often takes place within milliseconds and allows advertisers to serve highly relevant ads with very high precision.

How Does a DSP Work?

Two Types of DSPs You Should Know About

As a rule, all modern DSPs fall into two big categories.

The first one is self-service DSPs. Advertisers have direct access to such platforms. They can leverage all the required tools to manage their digital marketing campaigns, set bids, define targeting, and monitor the performance of their ads.

The second category unites full-service DSPs, also known as managed platforms. Such platforms are operated by dedicated account managers or ad ops teams. These experts work on behalf of advertisers, deal with campaign setup, as well as handle optimization and reporting.

At the same time, hybrid platforms offer businesses a choice between both modes based on their ongoing needs and experience level.

Main Benefits of Self-Service DSPs

Self-service platforms enable advertisers to use such tools as:

• A campaign management dashboard for setting up, launching, and modifying campaigns across multiple channels;
• Advanced audience targeting options;
• RTB integration;
• Ad creative management tools;
• Budget and bid control tools;
• Analytics and reporting.

If your company has experienced marketers or in-house media buyers, opt for a platform of this type. It will ensure great flexibility and cost efficiency.

Key Features of Full-Service DSPs

Full-service DSPs provide not just tools but also strategic support and full-scale campaign management. Typically, they offer:

• Dedicated campaign managers;
• Customized targeting and bidding strategies;
• Performance analysis and reporting;
• Creative ad optimization;
• A/B testing;
• Consulting on audience segmentation.

With all these capabilities, these platforms can be a good choice for businesses that do not have the resources for managing day-to-day ad operations on their own.

Examples of Popular Demand-Side Platforms

Here are some of the most widely used DSPs in the digital advertising market.

The Trade Desk

The Trade Desk gives advertisers powerful tools to plan, execute, and optimize omnichannel campaigns. It supports various ad formats, including display, mobile, social media, audio, and CTV ads.

Source: The Trade Desk

The list of its key features includes enterprise-grade audience targeting, cross-device and cross-platform ad optimization, and its proprietary AI copilot that helps brands maximize the impact of their ads.

Google Display & Video 360

This platform often becomes a choice for businesses that are already actively using Google’s marketing stack. It enables advertisers to manage programmatic campaigns across Google’s channels (such as YouTube and Google Display Network) and other leading ad exchanges.

Source: Google Marketing Platform

The DSP supports multiple ad formats, cross-channel media planning, comprehensive audience management, and efficient fraud prevention. It stands out for seamless integration with Google’s ecosystem and support for video-heavy ad strategies.

Amazon DSP

Amazon’s platform boasts high popularity among eCommerce brands and advertisers targeting shoppers.

Source: Amazon Ads

It provides businesses with exclusive access to Amazon audiences, as well as lets them place their ads outside Amazon-operated properties. Amazon DSP offers powerful retargeting capabilities and detailed performance metrics.

Demand-Side Platforms and Supply-Side Platforms: How Do They Interact?

Alongside DSPs, supply-side platforms (SSPs) play a vital role in the programmatic advertising ecosystem.

While DSPs are focused on helping advertisers find the most relevant ad placements, SSPs work to make publishers’ ad inventory available to multiple demand sources in real time.

DSPs and SSPs interact through a real-time programmatic auction system.

These two types of platforms collaborate to ensure the high relevance of ads reaching users in real time. Together, they match high-quality inventory with highly targeted ad demand. This interaction helps minimize wasted ad spend, as well as drives better performance for campaigns and higher revenue for publishers.

Let’s briefly summarize the advantages that digital ad market players can enjoy thanks to this interaction.

Benefits for Brands and Advertisers:

• More efficient and data-driven media buying on a vast range of platforms across the globe;
• Better targeting and personalization;
• Higher return on ad spend (ROAS).

Benefits for Publishers:

• Enhanced monetization thanks to a wider network of advertisers;
• Increased fill rates through competitive bidding;
• Better control over ad quality and user experience.

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How Can You Use DSPs for Programmatic Advertising?

With the right approach, DSPs allow media buyers to maximize campaign effectiveness and significantly increase their revenue. Here are the most commonly applied strategies:

• Audience segmentation. To define the most relevant audience segments, use first-party or third-party data.
• Geo-targeting and device targeting. DSPs enable you to deliver your ads to specific locations or devices.
• Retargeting. This approach includes serving ads to users who have previously interacted with the brand.
• Frequency capping. Control how often a user sees the same ad. This helps to avoid fatigue and irritation.
• Lookalike modeling. Ads can be shown to new users who resemble an existing high-converting audience.

How to Reach the Right Audience with Your Ads?

The precision in reaching the most relevant users is achieved thanks to advanced data integrations and targeting tools. Here is what makes it possible:

• Analysis of behavioral data;
• Demographic info, including age, gender, and income level;
• Contextual signals, such as site content and page category;
• Location-based targeting;
• Custom audience group.

The Most Important Metrics You Should Track on a DSP Dashboard

Below you can find a list of the key ad performance metrics that are typically shown on the DSP dashboard. They help you better understand how your ads are performing and whether your strategy needs any adjustments.

• Click-through rate (CTR) shows the percentage of users who click the ad.
• Impressions reflect the total number of times ads are served.
• Conversion rate demonstrates the percentage of users who complete a desired action.
• Cost per thousand impressions (CPM) is an indicator of how much you pay for every 1,000 impressions.
• Cost per click (CPC) and cost per acquisition (CPA) help you estimate the efficiency of your campaign.
• Return on ad spend (ROAS) is a metric that shows the revenue generated per dollar spent on ads.

What Benefits Can You Enjoy by Using a DSP?

By launching a demand-side platform advertising campaign, you can enjoy a row of perks.

• One platform for centralized media buying across such channels as display, video, mobile, native, and connected TV (CTV);
• Access to real-time bidding;
• Advanced targeting using demographic, behavioral, and contextual information;
• Great visibility of where and how the ad budget is allocated;
• Transparent performance reporting.

What is really convenient is that demand side platform marketing can help you effectively optimize your ad spending. For example, by automating bidding and buying, you can reduce fees on manual labor. By relying on data-driven insights, you can make more feasible budget-related decisions. At the same time, precise targeting and frequency caps minimize media waste.

The development of your own custom DSP, as well as the use of one of the ready-made platforms, requires investments from your side. However, proper implementation of such a solution can ensure the increased efficiency of your ad campaigns and help you avoid unnecessary ad spend over time.

Wrapping up

Today, DSPs greatly help advertisers reach their audiences faster and more efficiently. Real-time bidding, cross-channel targeting, and data-driven campaign optimization are among the most valuable opportunities that advertisers and brands can leverage with the use of such platforms.

If you are also looking for ways to streamline your media buying, the integration of the right DSP solution into your processes will be a turning point for your business.