Not Every Demand-Side Platform (DSP) Is Created Equal: What Is A True DSP?

Data-Driven Thinking “Data Driven Thinking” is a column written by members of the media community and containing fresh ideas on the digital revolution in media.

Today’s column is written by Nat Turner, CEO, at Invite Media.

If you asked a group of people in the display industry to pick the biggest theme for display in 2010, I would be surprised if it wasn’t the concept of real-time bidding and the advent of the so-called “demand-side platform” (DSP). It seems that there’s a new “DSP” launching every week these days, each with its own twist or differentiation. Over the last several years, I’ve met or spoken with a number of agencies and marketers on the topic.

The good news is that many of these buyers have started to realize the massive potential impact that a DSP technology can bring to the table. The bad news, however, is that their decision-making process for figuring out what this all means has become extremely muddled and complex (and is only getting worse). What I’ve realized is that very few people really know what a “true DSP” is or how to evaluate one (and to no fault of their own), or even how to tell one DSP apart from another. Any company can claim anything on their website; any company can build a nice PowerPoint deck or tell a great story about real-time bidding or rocket science optimization. At the end of the day, what really matters is that the agency makes the right decision for their client(s) and chooses a well-evaluated and thoughtful path in order to take advantage of this tectonic shift happening in the industry.

From this, one of the main “ask’s” leaving meetings these days has become, “What are the key characteristics of a true DSP?” Instead of writing up a different response for each meeting, I instead tried to create a broad list by collecting a bunch of thoughts at our company, ideas from people in the industry, and direct quotes from agencies that have gone through this evaluation process. In a follow-up article, I will also list out a number of questions that should be asked in a RFP process to evaluate potential DSP partners.

Key characteristics that define a true DSP:

The DSP must provide a fully self-service interface. Clients should be able to have complete control via the interface and build an expertise around its use.
If the DSP provides managed services help to the agency, the DSP should be using the same interface that the agency would be using. The technology should not require any manual work behind the scenes to activate or “set live” a change or a campaign.
The DSP must remain neutral and have zero allegiances to any publishers, exchanges, data providers or other vendors. A true DSP should embody the word “platform” and not just be conduit or pretty interface to a pre-existing business.
The DSP must be fully transparent, starting with pricing and fees. All fees that the DSP earns should be exposed in the interface, and every penny that the DSP makes should be known and visible to the agency.
The DSP should not mark-up media cost without the agency knowing.
The DSP should not mark-up data cost without the agency knowing.
If the DSP works with a publisher directly, it should be in an effort to make that publisher’s inventory “biddable.” The DSP should not earn any additional margin from revenue sharing with the publisher or arbitraging the inventory.
The DSP must allow the agency to use its own exchange seats. This allows the agency to always have visibility into the exact cost of media to ensure the DSP is not taking any additional margin.
Just like media, the DSP must allow the agency to buy or negotiate data cost directly, but flow through a common integration. Data should be treated like media, it’s another part of the “supply side” that is purchased by the agency and thus should be transparent in cost.
The DSP should not, under any circumstances, own or operate an ad network. This is in direct conflict with the neutrality aspect.
The DSP’s goal should be to expose any feature or tool that a supply source provides (either ad exchange or data provider) and not to try and obfuscate/hide or re-brand certain components (ex. “DSP Auto Segment #1”, with no transparency into what that means). If a supply source provides it, the DSP should expose it for the agency self-service and let the agency decide whether to use it or not.
The DSP should not “bulk buy” media in order to re-sell to its clients. This could either be a function of another way to make margin, a lacking of technology, or a combination of the two.
Related to the above, the DSP should not take on media risk. Every impression should be purchased on behalf of a platform user at that time based on an active campaign that that platform user has created targeting that impression.

I’m sure I’m missing a few things here, and I’m sure people could disagree with a few of the points, but I believe this represents a reasonable list from my conversations in the industry. One thing I will say is that just because a company or offering does not match all of these points doesn’t necessarily exclude them from being a “demand-side platform.” This list is purely focused on the concept of what is a “true DSP”, which is just one type of offering available in the ecosystem. At the end of the day, the real question that the agency or media buyer faces is what kind of solution they’re looking for. This will guide what questions they should ask, what types of offerings and features they should value, and generally how they should run an evaluation process.

Follow Nat Turner (@natsturner), Invite Media (@invitemedia) and AdExchanger.com (@adexchanger) on Twitter.