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October 1, 2016

Table of Contents:

What is a DSP?

What is a DMP?

What is a Hybrid DMP or DSP?

5 Fundamental Differences Between DMP & DSP

If you’ve ever taken a look at a lumascape, it is clear that there are many companies in the ad tech space who identify themselves as a DMP, a DSP, or some combination of the two (“hybrid DMPs”). While Lotame was built with a focus on our data management technology, other “Hybrid DMPs” are now claiming to offer data management as an additional component of their own platform. However, there are vast differences between the pure-play, standalone data management platforms (such as Lotame) and hybrid DMPs.

Before getting into the benefits of data management platforms vs. DSPs and the fundamental differences between the two, it’s important to have a clear understanding of what each one is and where it fits into your data strategy.

So… What is a DMP, what is a DSP, and what is considered a hybrid of the two?

What Is a DSP?

A DSP, or demand-side platform, is a real-time bidding system that connects media buyers with data exchanges through a single interface. The DSP basically serves as the middleman between media buyers and publishers, providing a repository through which they can buy and sell ad inventory.

However, a DSP serves as more than just a clearinghouse for ads. This platform runs multiple campaigns from a single interface and integrates with DMPs to for targeted advertising.

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The basic functionality of the DSP is as follows: The DSP gets a request from an ad exchange. It analyzes data about the user providing the impression and assigns a value to that impression. The impressions are bid on through an automated process and the media buyer with the highest bid will receive the impressions.

The demand-side platform is not to be confused with the SSP, or supply-side platform. A supply-side platform is a piece of software that publishers use to collect advertising demand information to help them manage their advertising impression inventory. They may then connect to a demand-side platform which aggregates the data and uses it to inform its own functionality.

What Is a DMP?

The DMP, or data management platform, is a platform for collecting, organizing, analyzing, and activating data from any source. DMPs not only collect and store your data, but also organize that data to help you understand it and use it to inform your data-driven marketing campaigns.
The data a DMP collects falls primarily into three categories: First-party data, second-party data and third-party data:

  • First-party data is direct information about how your customers have responded to you. It’s information like demographics on customers who have purchased your products or services, what kinds of products they have purchased, and in what quantity. First-party data can also include interests expressed from your users, which the DMP can gather from mobile or desktop based on what websites, pages, or products a user interacts with. Because first-party data is gathered directly from the source (i.e. you gather it from site visitors), it is high-quality and valuable.

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  • Second-party data is the same high-quality information, but collected from another company obtained through a partnership agreement. Essentially, second-party data means another company shares their first-party data directly with you. This data is not available on the open data exchange and comes directly from the source to you, so there is no question of quality.
  • Third-party data is data collected from anywhere else. It can come from a variety of sources and is aggregated into segments, and is used to shape an overall picture of your users’ profile and effective marketing strategies. Third-party data is available in vast amounts from many different providers, and makes up for what first- and second-party data lack in scale.

The DMP aggregates data from all these sources and analyzes it, organizing the data to into useful marketing information. These data points can be mixed and matched to build “audiences” which are subsets of the data used for marketing campaigns.

DMPs also offer analytics about the data that it collects, translating the data into useful information that can be fed into your future marketing efforts. DMPs generally use advanced algorithms to identify additional lookalike audiences who are likely to perform your KPI, or to predict which audiences will convert that marketers can use to scale out their campaigns.

What Is a Hybrid DMP or DSP?

Everyone wants to be a DMP, and yet there are many other forms of technology who have built a DMP-light version of the technology onto their existing tech, and are suddenly claiming to also be a DMP.

Vendors who do not sell a complete data management solution like the Lotame DMP might instead sell a hybrid, which in general means a DSP with some basic data management functionality.

The media-buying capabilities of a hybrid DMP/DSP hinders the DMP to be constrained to only media buying. On the other hand, a standalone DMP with advanced functionality like the Lotame DMP is much more flexible in its usefulness to a company with respect to optimizing the value of their data. The flexibility allows for you to customize and pull the data you need specific to your business objectives.

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Whether you will choose a standalone DMP, a hybrid DMP/DSP or a standalone DMP and DSP that you link together will depend on your personal preferences and needs as a company. Before you choose, you should read on to understand more about the fundamental differences between DMPs and DSPs and get a demo of the Lotame DMP to see if it provides everything you need.

5 Fundamental Differences Between DMP and DSP:

1. Focus on Data Management

Hybrid DMP/DSPs were not built to be a data management platform. They were built to be demand-side platforms, which at its core is a platform for targeting media for clients. In other words, the focus for hybrid DMPs/DSPs is on targeted advertising, not data management.

In comparison, Lotame’s robust DMP focuses on client empowerment. Our technology enables you to access and use your 1st party, 2nd party and 3rd party data, wherever and whenever you want, via data export functionality and tech-stack integrations. So, whether you use multiple DSPs or even export your data to another DMP, we give you the power to use your data however you wish.

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2. Data Portability

Standalone DMPs, such as Lotame, have an export functionality to any media source you want. Because we are media agnostic, your data is 100% portable, meaning you aren’t married to any particular channel.

In comparison, the DSP business model is supported by you running media through their aggregated inventory, not typically a solution for managing targeted ad delivery on your media via your ad server.

3. Superior Data Collection

Lotame is a leading innovator in accurate data collection, and provides personalized service to deliver measurable value to your business. We have a state-of-the-art technology and a team of engineers focused on building this technology

In comparison, a DSP will not be able to collect the robust 1st party data in the manner that standalone DMPs like Lotame can. The focus for DSP engineers is on activating media buys, not necessarily finding ways to aggregate data.

The Lotame DMP goes beyond context to include rich demographics, behavioral signals, search terms, and a variety of other data points providing a complete data set for audience creation, insights and optimization.

4. Data Protection

Lotame values and protects consumer data. Our DMP is used only to provide you with deep analytic insights, for the sole purpose of further optimizing the performance of your audience segments. Meanwhile, DSPs might use your data to improve the overall efficiency of their campaigns and media revenue across multiple clients.

5. Customized Data Management

Lotame’s core DNA is data management. Customization built into our processes and data collection techniques allow you to ingest different types of customer databases. Lotame is willing to invest in creating custom processes to support your needs. This might not be the case with DSPs where media brings in most of the revenue.

DMP vs. DSP: Which Will You Choose?

While some DSPs claim that they are capable of data management, standalone DMPs like Lotame are really the best option if you’re looking for a robust platform focused solely on providing you complete access to and control of your data – the way you want and need it.

Learn more about how a cross-device data management platform works:

Have more questions or want more information on how Lotame’s Data Management Platform can help take your data strategy to the next level? Contact us or request a demo of our DMP.

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