Demand-Side Platforms – Is India ready?

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A demand-side platform (DSP) is a system that allows digital advertisers to manage multiple ad exchange and data exchange accounts through one interface. Real-time bidding (RTB) for displaying online ads takes place within the ad exchanges, and by utilizing a DSP, marketers can manage their bids for the banners and pricing for the data that they are layering onto target their audiences. Much like paid search, using DSPs allows users to optimize based on set key performance indicators such as cost-per-click (CPC) and cost-per-action (CPA).

DSPs as we know them have started to make inroads into the Indian digital media scene. It might sound like a buzzword today, but irrespective of what name we give it, DSPs will continue to evolve and be an indispensable part of Indian digital media scene sooner than later.

Before we discuss whether they will be successful in this market or not, it is important to understand some factors that will have huge implications on the ultimate destiny of DSPs.

Advertisers' Perspective

The India market is clearly getting divided into brand and performance advertisers. Looking at how SEM is being used in India by advertisers, most performance advertisers have in-house teams to optimize SEM campaigns in real time. These advertisers will continue to handle DSP interface too, in house.

Most brand advertisers rely on their agencies to handle the ongoing optimization of their SEM or display campaigns. They will let (read: want) their agencies to handle the DSP interface too. I personally believe that advertisers must make an effort to understand "the science" behind a DSP's overall way of functioning while they push their agency partners to learn all technologies and suggest best solutions for them.

I have seen how certain clients have reacted when they first heard about "ad networks" and always wanted to be on large, renowned portals only. I feel that those clients will understand that they are always buying "audiences" rather than "portals."

Agency Perspective

How a DSP can add value to an agency's story to clients will decide a lot about the fate of DSPs in India. Considering DSP means a lot to display media spends and a lot of "brand" advertisers' digital media efforts are largely managed by their agencies, the agency plays a vital role of deploying DSP interface for its clients. It simply means, in Indian context, increased workload for agencies. Therefore, a "self-service" DSP might be too disruptive to agencies during the early stage. DSPs might want to look at managed services help at this early stage in India before they even introduce a full service interface to agencies.

Given the above context, it will be worthwhile to discuss what a good DSP stands for and what should it encompass:

• The DSP must provide clients a full-service interface that they can use themselves to draw their conclusions and interpretations, etc.
• The DSP should not be inclined to any publishers and should present itself a common playground where all can play a fair game.
• There shouldn't be any difference in the interface given to agencies from the actual one that the DSP itself is using in case the DSP is providing managed services help to agencies.
• The DSP must be fully transparent about its fee and pricing structure for all stakeholders involved in the process.
• Indulging in "bulk" purchase of inventory is something that a DSP should refrain from. In fact, it should not take any such risk related to media.
• An agency should be able to buy or negotiate costs directly.
• Taking care of the neutrality aspect, the DSP should not own or operate any ad network.
• Without an agency involved in it, the DSP should not mark up any costs and there should not be any provision for arbitrage.
• Ad exchanges or data providers keep developing tools that can help client or agencies. The DSP must showcase all these options.

Some say that it is an extended form of ad networks with the element of RTB and eventually all ad networks will act as DSPs because their own existence is in danger now. No matter what fancy name we want to give it, the fact of the matter is that every advertiser or agency is looking for that "value" from every penny they spend in digital media and DSP provides them a great opportunity to do so.