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DMP vs DSP

November 28, 2018

Table of Contents:

What is a DMP?

What is a DSP?

What is a Hybrid DMP or DSP?

When to Use  a DMP

When to Use a DSP

5 Fundamental Differences Between DMP & DSP

DMP vs DSP

The first thing that many people notice when looking at the digital marketing Lumascape is the vast amount of platforms and vendors offered for programmatic media buying and data management. And while some of these platforms stay true to their core technology, lines are becoming blurred. As these companies begin to take on new shapes and forms, it’s important for prospective customers to understand some key differences between these platforms.

Data Management Platforms (DMPs) and Demand Side Platforms (DSPs) are two players in the Ad Tech ecosystem that have continually caused confusion among interested buyers in the space. Here, we are going to take an in-depth look at the DMP vs. DSP, specifically diving into their key differences and use cases so you can better understand which best fits into your data strategy.

What Is a DMP?

A data management platform (DMP) is a unified and centralized technology platform used for collecting, organizing, and activating large sets of data from disparate sources. Data management platforms have risen to the forefront of media and advertising on both the buy- and sell-side, as a result of an increasing focus on the analysis and targeting of audiences across multiple platforms, devices and media channels. The DMP is built on five interconnected pillars: collection, unification, organization, activation, and analytics.   

DMP Process

A DMP should have the ability to unify all different types of data within their one platform. The three types of data are first-, second-, and third-party, which are explained below:

  • First-party data: Refers to a brand or publishers own data that they have collected from their own consumers and/or brand advocated. This can include data from a website, CRM, social, search, display, analytics, or any other source of data they own. Because first-party data is gathered directly from the source (i.e. gather it from site visitors), it is high-quality and valuable.
  • Second-party data: Leading DMPs also allow second-party data sharing among selected partners, which are unique and bespoke data assets derived directly from an external source, including a publisher, a separate entity within your own business or an independent partner. Second-party data is someone else’s first-party data that you are accessing directly from the source rather than via an exchange.
  • Third-party data: Directly inside the DMP there should be direct access to a range of third-party data providers and prepackaged data segments. Clients can use this data to build new, larger audiences and to understand what actions and behaviors consumers are exhibiting across the wider internet, for an even more holistic view of their target customer.

Once data has been collected and organized within the DMP, they are a number of things a consumer can use to inform their business decisions moving forward. Any audience built within the DMP can be defined and analyzed using audience profile reporting. These analytics reports provide a 360 view of an audience, allowing clients to better contextualize the who, what, where, why and how of their target audiences or customer segments. Audience analytics offer powerful consumer insights for both publishers and marketers and should inform the overarching planning process.

DMPs also generally use advanced algorithms to identify additional lookalike audiences who are likely to perform with a publisher or marketers desired KPI. Lookalike modeling analyzes the behavioral attributes appended to a user’s profile to determine which attributes are most likely to predict a user’s actions. By understanding the user’s past engagements, lookalike models perform pattern matching to locate new profiles and increase your companies desired reach.

Watch this short video to learn more about DMPs:

 

What Is a DSP?

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

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Media Buyer to Publisher

In the past, digital ad space was bought and sold directly between ad buyers and ad sellers. In some cases, this process proved to be expensive and unreliable, leaving buyers in a tough spot. DSPs were created to provide a much more streamlined and cost efficient process.

The basic functionality of the DSP is as follows: it allows for advertisers to buy impressions across a number of different publisher sites, all targeted to specific users based on key online behaviors and identifiers. DSPs facilitate the relationship between the publisher and advertisers, automatically deciding which impressions it makes most sense for an advertiser to buy. The impressions are then bid on through an automated process and the media buyer with the highest bid will received the impressions. This process takes place in real-time, just as quick as a page loads.

What Is a Hybrid DMP or DSP?

Many companies, including DSPs, have built the technology to offer DMP-light capabilities in order to claim to be a DMP. Vendors who do not sell a complete data management solution like Lotame DMP might instead sell a hybrid, which means a DSP with some basic data management functionality.

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The media-buying capabilities of a hybrid DMP/DSP hinders their DMP capabilities to be constrained to only media buying. On the other hand, a standalone DMP, like the Lotame DMP, includes advanced functionality to support clients’ non-advertising data strategies (for example, content customization for publishers) in addition to their advertising strategies.  

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.

When to Use a DMP

You can use a DMP for a number of different reasons, ranging from:

  • Data Collection: By integrating with a DMP, you have the ability to gather your 1st-party data from any source, including your website, mobile apps, social presence, banner ads, and even your offline sources such as your CRM or loyalty programs. Once the data is gathered, you are able to aggregate it into a transparent, easy to digest view to understand who your ideal customer may be.
  • Audience Building: Once data has been collected and aggregated into your DMPs platform, you are going to want to use that data, combine it with 2nd- or 3rd-party data, and build audiences to target your messaging to. For example, if you are a travel website looking to target customers who live in DC but have shown an interest in traveling to the west coast, the DMP allows you to build as precise of an audience as you would like.
  • Audience Insights and Profiling: Lotame offers an Audience Profile Report that gives marketers and publishers a comprehensive view into an audiences patterns, trends, and intent through their digital imprint. By diving into an audiences makeup, companies will be able to understand the composition of their audience at a deeper level.
  • Personalization: Offering a personalized experience to your customer on and offline is key to success. By gaining audience insights and profiling your audiences, you can customize site messaging and creative, increasing your overall conversions.

When to Use a DSP

  • Campaign Building: A DSP helps ingest the audiences that you have created (in a DMP), analyzes them, and determines the best and most optimal candidates for your ad campaigns. By integrating with a DSP, you are ensured that those who are exposed to your ads will have a better chance of engaging with it and reaching your KPIs.
  • Real-Time Bidding: Gain extensive access to digital ad space being offered by many different ad exchanges and supply-side platforms. The DSP will place bids in real-time across all these different platforms, allowing clients to have instantly updated information on the impressions available for their ad display.
  • Campaign Budgeting: Whether you are looking to find out which impressions will generate the most value, or where to focus your media buying for your campaign moving forward, a DSP can help. They price that is set for each impression is related to the value that they may hold for you. DSPs can help with decreasing wasted ad spend and increasing ROI.
  • Frequency Capping: If you are a client who is looking to safeguard how often potential customers are exposed to a certain advertising, DSPs can help by frequency capping by audience.

 

5 Fundamental Differences Between DMP and DSP:

1. Data Collection

DSPs, much like DMPs have the ability to collect data. However, many DSPs can only collect campaign level data, which limits their ability to collect robust first-party data. Through the use of a DMP, data can be collected from various disparate sources, including digital properties (websites, campaign landing pages, etc), offline properties (CRM, Set-Top Box, email data, etc), and media properties (display, search, social, video, etc).

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2. Data Portability

DMPs, such as Lotame, have an export functionality to any media source you want. This activation step relies on the DMP having integrations and open APIs with other platforms, so that the audiences you build in the DMP can be seamlessly transported to DSPs, SSPs, and beyond. Because Lotame is media agnostic, your data is 100% portable, meaning you aren’t married to any particular channel.

The DSP business model really only supports those who are interested in buying media. If you are a publisher looking to sell media, then a DSP wouldn’t be the best fit for you. They are not typically a solution for managed targeted ad delivery on your media via your ad server.

3. Data Management

DSPs were not built to be a data management platform. They were built to be a demand-side platform, which at its core is a platform advertisers and media buyers can use to buy media on an impression basis.

In comparison, DMPs are a technology that 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, they give you the power to use your data however you wish.

4. Customized Data Management

Lotame’s core DNA is data management. Customization built into our processes and data collection techniques allow you to ingest different 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.

5. Data Protection

Many DMPs, much like Lotame, value 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.

DMP vs. DSP: Which Will You Choose?

Data management platforms are necessary because they offer publishers and marketers the ability to aggregate data from any source, make sense of that data, and use it for a multitude of applications, including audience targeted advertising, cross-screen messaging, and content personalization. And, demand side platforms are so important because they act as the control center that helps automate the buying of display, video, mobile and search ads for companies.

Lotame allows clients to accomplish both the data collection and organization and the data activation. With Lotame, you’ll get data portability as we allow you to take your data to and activate your data in every major DSP and exchange, including Google, AppNexus, the Trade Desk, Turn, TubeMogul, Videology, Tremor Media, Yahoo, DataXu, and more!

We know that data is a huge asset to you and your growing company, and we are here to help you collect, organize, segment, AND activate that data to reach your campaign goals.

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

If you are interested in learning about the Lotame DMP and our different DSP integrations, feel free to reach out. Contact us or request a demo of our DMP.

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