It’s not a secret that the programmatic advertising field is quite complex, comprising dozens of different technologies and tools designed to be used by advertisers, publishers, and other market players. Even though we’ve been talking quite extensively in our blog about some of the most important programmatic ad tech stack components, such as SSPs (supply-side platforms), DSPs (demand-side platforms), ad exchanges, and many other programmatic solutions, many people are still confused about them.
Which is not surprising if you think about it. There is such a great variety of platforms and tools of various kinds—white label and self serve solutions, publisher-focused tools and instruments meant for advertisers and agencies—that it’s not so easy to tell them apart.
When it comes to advertiser-facing solutions, one common area of confusion is the difference between DSP and ad networks. As these two types of platforms play rather similar roles, many people have a hard time telling them apart. What makes it even more confusing for some people, ad exchanges have many common features with DSPs and ad networks as well.
As you probably guessed, this article intends to fill the gaps in your knowledge about DSPs, ad networks and ad exchanges. We will highlight all the main differences between these types of programmatic solutions, allowing you to tell them apart with ease.
What is a DSP?
Demand-side platforms are solutions used by advertisers, ad agencies and other media buyers to automate the process of bidding and purchasing ad impressions, as well as setting up relevant ad targeting. DSPs allow advertisers to automate ad buying based on a number of available targeting attributes, such as user behavior, demographic, relevant search or geolocation.
DSPs are the tools that aim to make the ad-buying process a lot more automated and thus, faster, simpler and cheaper for advertisers. One of the key distinctive features of DSPs is that they allow advertisers to focus on the audience they want to reach instead of choosing specific publishers. DSPs typically have access to multiple ad exchanges and networks at the same time.
And this is where the differences between DSPs and ad networks become more visible. In many ways, DSPs emerged as the evolution of advertising networks. This is why most DSPs offer sets of functionalities that are very similar to ad networks. But modern DSPs also add new technologies to the mix, such as real-time bidding (RTB). At the same time, however, advertising networks today are also adopting these new features to stay relevant to the market demands. This is why the line between DSPs and traditional ad networks can be rather blurry in some cases.
What is an ad network?
In programmatic advertising, ad networks serve as intermediaries between DSPs and SSPs. Or, in other words, between advertisers and publishers. Ad networks aggregate ad inventory from different publishers, organize it into categories and offer it to advertisers.
So the main function of advertising networks is to aggregate ad inventory and sell it to agencies and brands. Not all ad networks are the same, of course. They can be categorized in multiple ways. One common way to divide ad networks into categories is by the structure of the ad inventories they offer.
- Vertical ad networks are the ones that focus on specific market niches, providing ad inventories from publishers with the most relevant audiences.
- Horizontal ad networks have a different approach, collecting ad inventories across a wide range of industries and market niches, aiming to provide advertisers with a rich choice of options.
- Premium ad networks are the ones that only accept premium publishers with large audiences and well-known brands.
DSPs vs ad networks. Main differences
As you can see, DSPs and ad networks, despite having so many common features, are not that similar after all. If the difference is still not entirely clear to you, here are several key points of distinction.
Ad networks are intermediary solutions designed to connect publishers and advertisers. DSPs, on the other hand, are tools designed for publishers to help them buy programmatic ads.
Ad networks offer pre-defined audience targeting based on the selection and categorization of publishers. DSPs provide users with programmatic user targeting customization options, allowing them to make changes along the way.
Programmatic technologies and automation
The majority of ad networks are not automated. Many of them also don’t support innovative programmatic advertising technologies such as real-time bidding, header bidding, etc. DSPs, on the other hand, do rely on programmatic automation capabilities and innovative technologies like real-time auctions.
CPMs and transparency
When it comes to CPMs, ad networks typically offer fixed predefined CPMs for all ad inventories. DSPs allow advertisers to set their own bids for every impression, calculating CPMs based on average price. Ad networks also tend to have low transparency, while DSPs provide users with many options to collect and extract data about the audience and ad campaigns.
What about ad exchanges?
The difference between ad networks and DSPs should be fairly clear now. We had a separate article covering ad exchanges, so here’s a quick recap of how ad networks and ad exchanges are different from each other.
Ad exchanges are online platforms that bring publishers and advertisers together by providing a technology-driven marketplace to help parties buy and sell ad inventory with maximum efficiency. Ad exchanges usually include various types of advertising inventory, such as display, mobile, video, in-app ads and other. They can also specialize in certain types of ads only.
Here’s the key difference between these two types of solutions. Ad networks aggregate ad spaces from various publishers on their platforms and sell them to ad buyers for a commission. Ad exchanges serve the same goal, aggregating ad inventories from multiple publishers and offering them to advertisers and ad buyers. But the latter ones allow publishers and advertisers to trade directly by enabling transparent prices for impressions with RTB technology. Ad exchanges can include ad inventory from multiple ad networks as well as other sources, thus providing a wider choice of ad inventories available for sale.
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