DMP vs DSP: All you need to know

It’s no secret that data is crucial to efficient advertising. And in a world of big data, you need the respective technology to manage the vast amounts of information being generated by each and every person. Publishers and advertisers alike need tools to gather, store, analyze and manage such data and several technologies have emerged in ad tech that are essential to achieving scalable results. In this article, we will cover what data management platforms and demand-side platforms are, what each is used for and how they differ. Let’s get right into it.

What is a DMP?

Data management platforms, or DMPs, are essentially data warehouses. They help publishers, advertisers, and agencies collect, organize, store, analyze, and overall manage information about online users, most often cookie IDs. The data in DMPs can be first-, second-, and third-party. The information is used to better understand customers and audiences, optimize media buys, and execute better ad campaigns. For publishers, in particular, DMPs help build audience segments, which are more attractive to advertisers and can be pitched at premium prices. 

What is a DSP?

Demand-side platforms, or DSPs, allow marketers, agencies, and buyers to optimize how they bid on ad inventory simultaneously across multiple ad exchanges in real-time. The technology helps them improve their ad spend strategies and gives bidders a number of tools to effectively manage ad campaigns, set maximum bids and budgets, define targeting, and monitor campaign goals. DSPs also give advertisers access to very granular data on audiences and campaign performance, as well as advanced user interaction statistics.

How are they different?

The key difference between a DMP and a DSP is that the first is used for data storage purposes while the latter is used for actually buying ad space based on the information input. DMPs help the decision-making process by feeding the relevant information, but without being connected to another piece of technology, they cannot perform any further actions. DMPs are usually connected to DSPs, but can also be linked to SSPs in which case they would store information about a publisher’s readers and help sell ads for a higher value.

Let’s see how DSPs and DMPs compare in more detail:

UsersWebsite owners; advertisers; intermediaries.Buy-side representatives, mostly advertisers, and agencies.
UseAnalysis of large quantities of data, including customized data management.Buy media on an impression basis and set intricate conditions for ad inventory buying; automate repeatable actions and eliminate human negotiations.
Data sourcesFirst, second and third-party sources, including website and landing pages, CRM and email data, as well as search, social, video, and other media properties.Limited to campaign-level data.
Data protectionHigh level of data privacy as only the data owner can utilize it.Provides a lower level of data privacy, segmented data can be further sold and used for a higher reach in marketing campaigns.
Data portabilityData can be transferred to other ad tech platforms, such as DSPs and SSPs via integration and open APIs with other platforms.Limited data portability, mostly suited to advertisers.

DMP – DSP hybrid?

Traditionally, DMPs and DSPs were created as separate platforms to be used for different purposes. However, with time, more and more DSP providers have begun to offer DMP technology alongside their core platforms. This symbiosis creates efficiencies for the customers (advertisers and marketers) as it reduces the need for using multiple technologies and brings total costs down. On the other hand, opponents of this combo say that standalone DMPs provide better data portability and the possibility to feed data into a wide range of DSPs. Besides, the hybrid model offers limited data privacy compared to the standalone DMP. Which one the buy-side goes for is a matter of both user goals and budget. 

Wrap up

In the fast-paced world of ad tech, various platforms are used by both advertisers and publishers to facilitate better and faster decision-making, bidding, and deal execution. With a DMP one can conduct powerful data analysis and manage data in a way customized to their needs. DSPs, on the other hand, provide the arena for real-time bidding and offer indispensable deal automation. With the emergence of DMP-DSP hybrids, advertisers have an even greater array of options and decide to go for either standalone platforms or a hybrid solution, depending on their needs and available budget. Publishers can also benefit from the use of DMPs by building attractive audience segments that can be pitched at a higher value to advertisers.