A 10-Step Guide to Evaluating Demand-Side Platforms

  |  March 19, 2010   |  Comments

DSP technology is all about making more intelligent decisions, so here are some factors to consider.

If you follow the latest digital media news, you may have noticed the term demand-side platform (DSP) quickly go from a) industry insider terminology to b) popular business model description to c) an inspiration for many alternative acronyms. (The media loves new acronyms, but it enjoys debate about them even more.) Are you keeping up?

Even for us, the sheer pace of information about DSPs in the marketplace has been astounding - and we are in the business of evaluating information in real time! Pair it with the emergence of real-time bidding, in fact, and you have a virtual torrent of new concepts, new lingo, and new possibilities.

In our conversations with marketers, however, we hear each day that there's still a need to understand the basics. In the rush to leap from A to B to C, many in the intended target audience may in fact have been left behind. In prior columns, I've done my best to try to help marketers understand the fundamentals of real-time bidding, demand-side platforms, and how together they can be leveraged for various marketing objectives.

How can this information be made actionable? To wrap up my series, a client suggested that I offer my take on a "consideration framework" for marketers who may be evaluating DSPs for their own advertising needs. Here are the main items to consider as I see it, along with some qualifying questions for each:

  1. Real-time bidding (RTB): Our clients are finding that real-time bidding delivers significant value compared to other methods of buying online media. (See my column, "Real-Time Bidding: What It Is and Why It Matters" for an overview.) Does the DSP offer impression level RTB? Do they also offer rules-based bidding? Who are their inventory providers?

  2. Optimization: What's driving the campaign decisions? Is the approach rules-based or algorithmic? Are the algorithms static or dynamic? What parameters are being evaluated for each impression considered for purchase? Are creative concepts and sizes part of the equation?

  3. Use of data: What types of data can the DSP integrate for your campaign - can it use your own audience and campaign data? Can third-party audience data be applied? If so, can data from any provider be used, or are you limited to certain providers only? Can the DSP offer any assessment of the data's effectiveness?

  4. Targeting: Does the DSP offer cookie-level retargeting? Is it possible to retarget users across the DSP's inventory sources/exchanges?

  5. Campaign planning: Can the DSP do frequency capping? Is it across inventory sources/exchanges? Are daily budget control capabilities offered? How easy is it to scale a large campaign with many distinct goals for optimization?

  6. Reporting: What types of reporting are offered and how are they accessed? Are the metrics standard or custom? Are any qualitative insights delivered?

  7. Service model: Does the DSP offer platform or turnkey management solutions? How much of the campaign management is automated versus handled by a campaign manager? Is there a self-service option?

  8. Pricing model: Is pricing driven by spend, performance, or some other measure?

  9. Business model: Is the DSP's business model aligned with buyers of ad inventory, or also sellers? How are these dual allegiances addressed internally?

What's No. 10 on the list? ROI (define). Without improved ROI, after all, you might as well stick with legacy ad server and ad network buys. Ask for case studies and find out if the DSP can identify and will share the discrete, unique factors driving ROI, thereby providing long-term value beyond a current campaign.

If you are considering a DSP, hopefully this list will help you identify what's most important for you in a provider and perhaps suggest some new questions that you hadn't previously considered. Certainly there are more than 10 issues I could have listed. In a marketplace evolving as quickly as this one, a standard request for proposal (RFP) style evaluation process may not even be effective. Jumping in for a test may be a better way to go, especially for agencies. With some direct experience under your belt, it's easier to define a solid business case and delivery model for your clients.

In any business, informed consumers are usually the best customers, so while I'm the CEO of a demand-side platform, I have done my best here to set aside my bias. DSP technology is all about making more intelligent decisions, and we want to help marketers make them about DSP providers, too.

Related news article: Yahoo Finally Allows Real-Time Bidding on Network and Exchange

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Mike Baker

Mike Baker is president and CEO of DataXu. He has been pioneering digital media platforms for 20 years and is a widely recognized thought leader in interactive advertising. Before cofounding DataXu, he was vice president at Nokia, where he created and ran Nokia Interactive. Baker came to Nokia through its acquisition of mobile advertising leader Enpocket in 2007, where he was the founding investor and CEO. Baker was previously a partner at venture capital firm GrandBanks Capital. He has also been executive vice president at CMGI and Engage Technologies, an innovator in online advertising and behavioral targeting. Baker holds degrees in law and telecommunications management.

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