How Does a DSP (Demand-Side Platform) Purchase Ads? (Part 1) - Groundhog MI

A DSP (Demand-Side Platform) is a platform for advertisers to purchase ad inventory. How does a DSP acquire ad traffic? You might have heard of RTB, but there are other methods as well. This article focuses on the various ways to purchase programmatic advertising.

For an understanding of DSPs, SSPs, and DMPs, read this article: [Decoding the AI-driven digital advertising landscape: Unraveling the roles of DSPs, DMPs, and SSPs]

1. RTB (Real-Time Bidding)
2. Direct Deals
3. Programmatic Direct
(1) Programmatic Guaranteed
(2) Preferred Deals

1. RTB (Real-Time Bidding)

RTB is the most common mechanism in programmatic advertising. When a user visits a website or opens an app that offers ad placements, an ad request is triggered. The DSP must bid for the placement within milliseconds, with the highest bidder winning the opportunity to display their ad.

AI Advertising (MI-DSP™) is a demand-side platform also built on RTB as its core technology.

Within milliseconds, the following process occurs:

Features of RTB:

Reduced Manual Labor: The entire bidding process is automated, eliminating the need for manual operations.
Dynamic Pricing: Ad prices fluctuate based on market demand, with bids processed automatically.
Wide Reach: RTB covers a vast array of media resources, including news sites and blogs, allowing for the exclusion of invalid traffic and ensuring budgets are spent on the right users.
Precise Targeting: Ads can be targeted based on user behavior, interests, and even geographic location.

2. Direct Deals

Direct Deals involve advertisers negotiating directly with publishers to place ads without bidding. Advertisers purchase placements and related resources at a fixed price.

Features of Direct Deals:

Fixed Pricing: Advertisers and publishers agree on a set CPM or total budget, avoiding price fluctuations during the campaign.
Reserved Placements: Ad placements are secured in advance, ensuring availability.
Manual Negotiation: Terms such as price, display position, and duration are typically negotiated manually.
Controlled Delivery: Advertisers have greater control over ad placement, audience targeting, and frequency.
Guaranteed Impression: Direct collaboration ensures higher quality resources and appropriate content environments for ad display.

3. Programmatic Direct

This method combines the advantages of programmatic technology and Direct Deals. Advertisers transact directly with media suppliers through programmatic platforms, allowing for better monitoring and optimization without RTB bidding. Ad placements are secured in advance, offering price control and guaranteed quality.

Programmatic Direct is categorized into Programmatic Guaranteed and Preferred Deals.

(1) Programmatic Guaranteed

Programmatic Guaranteed deals, terms such as placements, pricing, and campaign duration or impressions are pre-negotiated, with delivery executed programmatically.

Fixed Pricing (e.g., CPM/total budget)
Ad Placements (e.g., homepage banner/in-article placement)
Impressions or Duration (e.g., 1-week campaign guaranteeing 1 million impressions)

Features of Programmatic Guaranteed:

Guaranteed Resources: Advertisers are assured of specific ad impressions or placements.
Transparent Pricing: Prices are agreed upon before the programmatic transaction, avoiding bidding-induced fluctuations.
High-Quality Placements: Pre-determined placements ensure ads appear in premium locations.
Efficient Delivery: Utilizing programmatic platforms enhances ad optimization and monitoring efficiency.

(2) Preferred Deals

In Preferred Deals, publishers mark specific ad placements as preferred within the SSP at fixed prices. Advertisers access these placements through the DSP with priority but must purchase at the set price.

Features of Preferred Deals:

Priority Access: Advertisers gain early access to premium placements.
Non-Exclusive: If the advertiser declines, the placement becomes available for others to bid.
Flexibility: Suitable for advertisers seeking quality placements with limited budgets or specific needs.

(3) Difference between Programmatic Guaranteed and Preferred Deals

Feature	Programmatic Guaranteed	Preferred Deals
Price	Fixed price	Fixed price
Inventory Access	Guaranteed access	Priority purchase, but not guaranteed
Impressions	Guaranteed impressions	Impressions not guaranteed
Flexibility	Lower (conditions are locked)	Higher (advertisers can choose whether to purchase)
Scenario	Large-scale brand advertising campaigns requiring stable resources	Testing new media resources or flexible response to market demand

In the next post, we will introduce PMP in more detail. Feel free to contact us if you want to know more!

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