By 2021, marketers will spend 75% of the total marketing budget on digital marketing itself (Salesforce research).
That’s the rate at which digital marketing is growing!
The more you target your audience, the better you can sell. But how to reach your audience effectively and increase user engagement for higher conversions?
Creative content, illuminating graphics, catchy ads will surely do the magic. Is that it? Not at all. To work on all this, the key ingredient is customer data.
Gathering customer data is not difficult, but filtering it is a tedious task.
It’s essential to segment and analyse data for creating ad campaigns and target the specific audience. That’s where you need DMPs (data management platforms) and DSPs (demand-side platforms).
Let Us Understand Why DMP vs DSP is a Trending Topic Today!
What is the Definition of DMP and DSP?
DMP or data management platform is a software that collects customer data from various online or offline sources and organizes them into different audience segments. These segments are monetized directly or used as cost-saving opportunities.
DMPs are versatile and independent when compared to DSPs. Perhaps, that’s why our DMP vs DSP debate is more interesting. However, demand-side platforms also play a vital role in digital marketing.
DSP or demand-side platform is a software that is used to buy an advertising slot. DSP takes the insights from DMP to help advertisers in making an ad-buying decision.
Uses of DMP
DMP (data management platform), as the name suggests, is used for managing large sets of customer data which is further helpful in marketing.
A data management platform helps in data segmentation, for acquiring data insights and also for analyzing customer retention and attrition rate.
DMP works as a standalone platform for creating ad campaigns, data activation and hyper-targeting. Hence, DMP is one of the significant elements in digital marketing, and it’s a crucial aspect in DMP vs DSP discussion.
Uses of DSP
A demand-side platform is mainly for ad buying and ad management. DSPs, along with SSPs help advertisers purchase relevant search, video, display and mobile ads from ad exchanges.
However, the ad buying process happens in an automated manner. The price of the ads (CPM) is determined through the real-time bidding.
So, the advertisers have an advantage of buying ads at a price which is convenient for them. That’s why DSP forms an essential aspect of online marketing.
Further, let’s move on to its role in programmatic advertising. And, understand its importance in relation to DMP vs DSP.
Do You Know About Programmatic Advertising?
Programmatic advertising is an automated process of buying and selling an advertising slot. The brands or agencies will utilize the analysis from DSP to decide the spot for their ads.
DSP will share this information to SSP and ad exchanges. Then, publishers will sell ad space with the help of SSP (Supply-Side Platform). No doubt, brands, advertisers, agencies and other businesses are making the most of programmatic advertising.
The question is, what makes it so popular? And, its part in DMP vs DSP.
Have you observed the products that you have saved in an app/website’s cart starts appearing in your social media feeds? How did the advertisers know that you have shortlisted these products?
Well, that’s the magic of programmatic advertising. Interestingly, DMPs and DSPs are the reason why programmatic advertising works the way it does.
Here’s Your Complete Guide On DMP vs DSP
The data management platform is an integral part of the adtech industry. It is DMP which helps in extracting maximum value out of your customer data.
The work of a DMP is to gather customer information from various sources and organize it into predetermined categories. These are nothing but the audience segments which are essential in online marketing.
DMPs give a clear picture of the target audience and where to place your campaigns.
It is one of the major tech platforms which moderate and accelerate audience monetization. Let us see how it impacts our discussion on DMP vs DSP.
How Does DMP Work?
DMP works in four primary levels such as data collection, data segmentation, data analysis and data transfer. After the analysis stage, insights reach DSPs, ad exchanges and SSPs.
In a way, DMP filters complex data for advertisers and agencies. Hence, DMP has a significant role to play in online marketing.
Further, you’ll learn more about DSP and its prominence in DMP vs DSP.
What is the Function of DSPs in an Online Ecosystem?
You need a marketplace to buy or sell any product. Likewise, DSP (demand-side platform) is a marketplace for ads with a huge inventory of advertisers and publishers.
DSP uses the insights from DMP to analyse the appropriate ad slots for its buyers or sellers.
DSP shares this information with ad exchanges and SSPs. The ad exchanges work like brokers and match the data. Then, the real-time bidding process takes place with predetermined prices.
Here you can buy or sell impressions according to these formulated prices. This automated process is one of the highlights of DMP vs DSP in the ad-buying journey.
Once the bidding is over, the next step is to find an ideal spot to display your ad. Finally, SSPs come into action and post your ads for your audience.
SSPs will assign you the ideal ad space which can lead to conversion. Next, moving on to supply-side platforms and their part in DMP vs DSP.
What is the Role of SSPs in DMP vs DSP?
SSPs (supply-side platforms or sell-side platforms) help publishers manage advertising inventory. Many app, website or DOOH (digital-out-of-home) owners depend on SSPs to sell their ad space.
SSPs sends the publisher’s data to ad exchanges or ad networks, and in turn, they communicate to DSP. They are not entirely independent platforms; they work in connection with ad exchanges, ad networks, DSPs and DMPs.
Since programmatic advertising works in a chain process, these platforms need to co-exist.
It’s also crucial for DMPs and DSPs to have a better correlation; to sort data and another to identify the right space to get maximum conversion.
Both platforms are diverse and work differently in the online advertising system. So, the argument over DMP vs DSP continues.
Channel Your Attention Towards Differences Between DMP vs DSP
According to Econsultancy study, 68% of digital marketers believe that DMPs have the potential to reshape programmatic advertising in future.
However, DMP can’t do much without the support of another platform. Then, why DMPs are prominent?
Here are some distinguishing factors between DMP vs DSP.
DMP Has Access To All Sources Of Data
The data management platform is a storehouse of customer data. It can gather data from various sources like social media, websites, apps, devices, CRM, ad campaigns, and more. DMPs are a treasure trove of first-party data.
DSP Doesn’t Have Access To All Sources of Data
DSP can only gather marketing campaign data. It functions as a second-party or third-party data inventory. DSP can never have a first-party database on its own.
A DMP Has Varieties Of Data
Data management platform has a robust collection of data. You can use the audience segments for various marketing purposes.
It is not for only ad buying or selling. In a way, DMP may have a slight competitive edge when we compare DMP vs DSP.
DSP is Solely For Buying Media
A demand-side platform is only used to procure a media space to display your ads. This software is mainly for inventory buyers. This is a major difference between DMP and DSP.
DMP Gives You Full Control Over Your Data
In a DMP, your segmented data can be accessed for various purposes, including media buying through DSPs and SSPs, creating new business models, identify cost-saving opportunities and more. You can have full control of your data in a DMP.
Media Buying is the Sole Purpose of DSP
The data in DSP is merely for ad buying. It can’t be used to improve your business unless you are looking for media buying. This is an essential point to know in DMP vs DSP.
DMP is Risk-Free
Your data is secure in a DMP because the owner has full control of the data. It guarantees a higher level of data protection. You can use it for your economic growth without worrying about losing your data.
DSP Allows the Data To Be Reused
The owner will not have control over the data in a DSP. The data might be reused to improvise the ad campaigns without your permission. Give attention to this difference between DMP and DSP as it deals with data security.
Although DMP has the potential to be a standalone platform, it works more effectively when linked with another platform.
Similarly, a DSP is more powerful when it is linked with a data management platform. So, this correlation has led to the rise of DMP-DSP hybrid platforms.
The concept of a DMP hybrid or a DSP hybrid is unique and has turned out to be beneficial for marketers, publishers and advertisers.
Let us understand the role of a DMP-DSP hybrid platform in DMP vs DSP.
What is a DMP-DSP Hybrid?
Who wouldn’t be interested in a 2-in-1 package! The new concept of DMP-DSP hybrid is a kind of 2-in-1 package.
Earlier, advertisers had to invest in DMP and DSP separately. Now, providers have come up a DMP-DSP hybrid platform.
Here you can approach one platform and easily connect with another platform there itself. There are two main types of hybrid platforms: 1) A DMP with the qualities of a DSP and 2) A DSP which can also work as a DMP.
DMP-DSP hybrid is working wonders for marketers, advertisers and agencies.
Still, the question remains, should you go for an independent platform or a hybrid platform? How is it contributing to our discussion of DMP vs DSP?
Take a Look At These Benefits of DMP-DSP Hybrid Platform
Investing in a DMP-DSP hybrid platform is a good alternative. Glide through these advantages below, which proves the point:
Cost-effective – DMP-DSP hybrid is less expensive when compared to your investment in two different platforms.
Better connection – Connectivity with other platforms is more comfortable with a DMP-DSP hybrid.
You don’t have to struggle to manage your data from one platform to another. Once the data is sorted and analysed in a DMP, it automatically goes to a DSP for further steps.
Streamlined process – Your audience segments are well-organised and utilized in a hybrid platform. Inefficiencies, communication gaps, cost-wastage is less in a DMP-DSP hybrid.
Working under one provider – You don’t have to stress yourself with managing two different vendors. The whole process takes place under one vendor only.
Ultimately, it’s your goal which will be the deciding factor for choosing any platform.
So far, we have covered all about DMP vs DSP and why they are essential in the digital marketing spectrum. The end goal of all this is effective audience monetization.
A decade ago, marketers had no access to customer data. Today, digital marketing has reached a pinnacle with its advanced technologies.
Easy access to customer data is one of the prime aspects in the rise of digital marketing. Hence, there is more demand for software like DMP, DSP, SSP, etc.
More and more businesses are investing in DMPs and DSPs to make the most out of their customer data. Hence, DMP vs DSP is the most trending topic in the digital advertising world.
Our brief discussion about DMP vs DSP allows you to make the right choice; and also helps you in successful data monetization.
Hence, more and more businesses are interested in adtech and it is the reason why DMP vs DSP is the talk of the day.