At the recent iMedia Agency Summit in Austin, one theme buzzed louder than the rest.  Demand-Side Platforms, or DSPs, are a new online media buying method that is less than a year old.  It allows media buyers to choose from a large bucket of unsold, online display advertising impressions from across the Internet.  A DSP’s real-time bidding process mirrors paid search.

While DSPs bring opportunity, they also have pros and cons.  It’s a good idea to keep the following points in mind when considering how DSPs might fit into your online advertising mix . . .

Ad Network Impact:  Ad networks have always offered the best option for achieving large-scale reach at cost-efficient rates, aggregating billions of impressions.  However, ad networks have sprouted up everywhere in the last three years, which has commoditized them without offering value or differentiation in their services.  Competition from so many DSPs means that only a handful of truly strong networks will ultimately remain – those offering safe and law-abiding behavioral targeting, premium content and custom media opportunities.

Quality Control:  In its most basic form, online media can be classified as display advertising, also known as banners.  More custom media components include elements such as content integration, brand immersion and custom takeovers, such as page re-skins.  With DSPs, the media available for bidding will tend toward what’s commonly known as “remnant” or unsold media.  Strictly translated, these are banner ads running across a plethora of sites, which could include everything from ComScore Top 100 premium sites to very long-tail sites.  This media can work well when scale is a leading tactic, but can also bring bad placements that have a negative brand impact.

Lower Cost:  Buyers have direct access to media, eliminating network or publisher mark-up.  DSP purchased media costs can fall into the low, single-digit CPM ranges.  For very direct-response, focused campaigns, DSPs can offer an attractive alternative or be complementary to premium content and traditional ad networks.

Purchasing Efficiency:  Because DSPs use a similar approach as paid search, they make it much easier to focus on campaign management and optimization, resulting in impressive purchasing efficiencies.  Real-time bidding makes room for management that could require an increased scope of projects.  This can reduce the overall efficiency that may come with the media.

Empower MediaMarketing considers Demand-Side Platforms to be another tool in the toolbox for media buyers.  A DSP can complement current media planning strategies for certain select clients, depending on overall objectives and campaign goals.  While this isn’t a replacement for all current strategies, we view this as part of an ongoing need for optimization strategies and custom media opportunities as the process of online media buying and selling continues to evolve.

By: Tim Glover, Empower MediaMarketing Director of Digital Media