In the Dock: Demand Side Platforms

IN THE DOCK: DEMAND SIDE PLATFORMS

ID COMMS VERDICT

SERIES Prepared by Matt Gill (ver 24/5)

About the ID Comms Verdict Series

The ID Comms Verdict series looks at some of the more contentious issues within the media industry today.

These topics tend to be strongly polarising, with strong opinions and voices on either side. This means it can be difficult to find a balanced view and a valued opinion.

In this series, we attempt to present a balanced view, show both sides of the argument, and make our own verdict.

Of course – the final decision is yours…

2 ID Comms Verdict Series

About ID Comms

ID Comms Ltd is a media consulting company with strategy and innovation at its heart. Based in Shoreditch, London, we are leading providers of media solutions to companies that need access to first-class media expertise in flexible and cost-effective ways.

ID Comms provides high-quality media resources – from specialist talent to innovative processes and tools – that increase value, optimize performance and improve accountability for international brands.

The company was founded in 2009 by Tom Denford and David Indo, you can find out more about us here:

http://www.idcomms.com


Introduction: What is a Demand Side Platform?

A Demand Side Platform (DSP) is a technology platform that provides a single media buying point across multiple display inventory sources (i.e. ad exchanges, ad networks and other media suppliers).

DSPs can exist as standalone technology platforms/suppliers, or within top agencies with a managed service layer on top – in this case they are often referred to as Agency Trading Desks.


How do they work?

Online display inventory (e.g. banner advertising) is bought via a Demand Side Platform using an automated auction based system that operates in real time.

This means that the price for each impression can be determined and bid upon based on its value to a client’s business goals at that moment.

And because this value can be directly linked to business KPIs (e.g. online sales), proxy measures such as reach and frequency can be replaced by harder ‘outcome-based’ metrics based on tangible value delivery.


The Case for the Prosecution In a nutshell – transparency, or a lack thereof.

That agencies use this relatively new and complex technology to bamboozle clients with technical language and terminology.

This is then used to mask questionable practices such as arbitraging inventory and double charging fees (charging clients both a ‘platform’ fee and agency fee).

Clients should also beware of rebate agreements between DSPs and suppliers that could call into question the absolute neutrality of these platforms.

These are sometimes masked as ‘strategic partnerships’ – e.g. whereby suppliers provide investment to agencies to build DSP technology.

Clients should also demand complete transparency in terms of media placement and use a campaign verification tool.


The Case for the Defence That buying online inventory via a single buying point allows for tighter control of budgets.

Dynamic management of budgets allows investment to be focused into the areas of the web that are delivering best results, improving ROI.

DSP technology also presents multiple audience targeting opportunities due to access to data across a huge network of media inventory – e.g. behavioural targeting segments (targeting users based on actual interests and behaviours).

Overlaying 3rd party audience data on top of media data can also create very specific audience targeting clusters – e.g. demographics, social segments etc.

DSPs are also able to retarget users within their inventory footprint and can apply a ‘holistic’ frequency cap across all inventory – allows for multiple/consecutive messaging and mitigates risk of over exposure to any one message.


Summary of the Cases For and Against

The Case for the Prosecution Summarised

As a relatively new and unfamiliar technology, Demand Side Platforms are open to abuse and a lack of financial probity on the part of media agencies and other DSP suppliers.

The Case for the Defence Summarised

Demand Side Platforms are a powerful tool for delivering strong ROI from online advertising campaigns, heralding innovative targeting opportunities and replacing proxy measures of reach and frequency with harder value-based outcome metrics.


The ID Comms Verdict

The ID Comms Verdict

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DSPs are indeed a powerful tool but need to be managed carefully.

Clients should push for absolute transparency from a DSP supplier so they are 100% clear on exactly how money is being made off of their media investment.

Clients should consider working with an agency selection expert to help them source the right DSP solution for their needs (which may or may not be met by their existing media agency of record).

There are multiple options – from licensing DSP technology ‘in house’ and using an agency as strategic advisor, to outsourcing both planning and buying to an agency or using a hybrid model involving a 3rd party technology supplier.

An expert advisor will also help clients to ask the right questions of DSPs in order to structure commercial terms in the best interests of their business and ensure financial probity on the part of the chosen supplier.

ID Comms Verdict Series

About the author Matt Gill is an Associate Partner of ID Comms

Matt has spent the last 12 years driving media innovation for some stellar global brands from adidas, HP, Jim Beam and British Airways.

Matt has been a consistent follower of the technological revolution in media and clients value him for his intuitive understanding of how to apply communications innovations to their business. Matt consults for clients wanting qualified, independent advice on how to invest in media technologies. His straightforward measured advice helps clients discern which opportunities they might invest in now, when to ‘wait-and-see’ and which are likely just fads to be avoided. Matt introduced British Airways to mobile applications in 2005 when this was still a breakthrough technology and championed adidas to deliver their first ever digital-centric World Cup campaign in 2010.

Prior to joining ID Comms, Matt worked for media agency Carat where he was responsible for leading media innovation on the adidas business globally. During this time he delivered the much-celebrated adidas campaigns ‘Impossible Is Nothing’ and Originals ‘House Party’, and Matt picked up numerous industry awards for media creativity and innovation.

http://uk.linkedin.com/in/mattjwgill


Rights and licenses Thank you for reading, please share freely.

This work is licensed under the Creative Commons Attribution-NonCommercial- ShareAlike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/

© ID Comms Ltd, 2012


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In the Dock: Demand Side Platforms

Business

Transcript of In the Dock: Demand Side Platforms