Understanding Programmatic Advertising: RTB, DSP, SSP, and Trading Desks Defined

AdTech is confusing. Not only are there a seemingly endless number of acronyms and jargon — DMP, DSP, SSP, CDP, RTB – but understanding the way each of these systems works together is even more complicated. Today we’re going to walk through what a trade desk is and how it fits into the programmatic advertising landscape, along with many of these other acronyms.

What is Programmatic Advertising?

OK, let’s start at the top. All of these acronyms are part of the programmatic advertising landscape. But before we go any further, let’s define the term programmatic advertising.

Programmatic is a term that can apply to many industries outside of just advertising. “Programmatic” refers to technology-enabled workflow automation, and in advertising refers to 2 computers talking to each other to execute campaign operations. Rather than needing multiple people to carry out these functions, technology does the hard part.  

What is RTB?

You can’t talk about programmatic advertising without someone mentioning RTB, but these terms are not interchangeable. Real-time bidding (RTB) is a technology mechanism for automatically bidding, buying and selling display impressions via an auction format. It is inherently programmatic and uses algorithmic or artificial intelligence (AI) technology to make informed media buys to serve a specific ad to a particular in nanoseconds.

RTB is the bidder technology on the other end of ad exchanges, recognizing every single impression opportunity that comes through and analyzing that opportunity for that marketer.

This technology asks questions like: Is this the right audience? Is this the right context where I’ll find the audience? Is it the right time of day to engage the audience? Are these consumers likely to purchase or move towards that performance goal that I’m optimizing against? That’s RTB. That’s that real-time bidding.

Real-time bidding is not just, “Hey, this is what I’m willing to pay for a specific placement.” And you can go in and say, “I’m going to pay up to 50 cents per click” or “I’m going to pay up to five dollars per conversion.” RTB analyzes multiple data to evaluate and value a placement, and to understand what the likelihood of conversion is.

RTB is efficient and cost effective, because not only can you target the right audiences now, you can pay what that audience is worth in that moment.

The converse of RTB would be making a publisher-direct buy. When you go direct, you’re probably paying a flat CPM. But when you are dynamically bidding in that individual opportunity instance, you’re allowing yourself to only pay what it’s worth to you. And that’s how you can back out and see these conversion goals and performance goals that move the needle and grow revenue for your company.

What is a DSP?

Demand-side platforms, or DSPs, are platforms that are used by marketers and agencies to buy display, mobile, video, audio, and search ads. (Marketers and agencies are generally on the “demand side” of the industry – as they have the demand to buy advertising, whereas publishers are on the “sell side” – because they are selling the ad space.)

While this process of buying ads was historically done by humans involving insertion orders, DSPs automate the process of negotiating ad rates and submitting IOs. The marketer buys impressions across a range of publisher sites, rather than going directly to one publisher to make a direct buy, allowing the marketer to target their advertising to an audience based on a variety of behavioral, demographic, or geographic criteria.

What is an SSP?

Just as DSPs automate the media buying side of the equation for marketers, Supply-Side Platforms (SSPs) are used to automate the other side for publishers. An SSP is basically the publisher equivalent of a DSP for marketers.

Every single publisher on the web has ad inventory they need to sell. You might have a direct sales team that sells a portion of that directly, but generally, if you’re The New York Times, you have billions of impressions that need to be filled every month. You don’t have a sales team that can sell at all.

It’s not necessarily efficient to hire a huge sales team and pay that overhead when you can just give that inventory to an exchange, where it will be bought and purchased in real-time, much like stocks in the stock market. This is when a publisher gets involved in an SSP to automate the sale of their inventory.

What is an Ad Network?

Ad networks were one of the first pieces of AdTech that appeared in the ‘90s when digital advertising first appeared. The concept is pretty simple: an ad network is a platform that served as a broker between publishers who had advertising inventory to sell and advertisers who wanted to buy advertising inventory online. Ad networks filled a gap in the world or programmatic, by aggregating a fair amount of inventory across multiple sites, and giving access to that inventory to marketers who otherwise wouldn’t have a place to buy it.

What is a Trading Desk?

The idea of a trading desk is somewhat elusive. Some people think of it as the technology that drives real-time bidding (RTB) technology or media buying, while other people think of it as the managed service layer above that.

While there are various definitions, Forrester Research describes an agency trading desk as: “A centralized, service-based organization that serves as a managed service layer, typically on top of a licensed demand-side platform (DSP) and other audience buying technologies; manages programmatic, bid-based media and audience buying. Works as an agency’s internal “center of excellence,” supporting agency teams wishing to tap into this new buying model on behalf of agency clients.”

This media and audience buying generally encompasses many the different channels – including things like display, audio, video, TV, native – in which you’re going to serve programmatic ads. While a DSP is a platform, a trading desk includes a team of people offering a managed service. It’s not just about the tech.

DSP vs Trading Desk?

Navigating your way through the DSP landscape can be daunting. How do you know which one is right for your campaign? Unfortunately, there isn’t a simple answer to this question.

Each DSP has different strengths and weaknesses. And when a trader is optimizing a campaign on an individual platform, they need to understand the strengths and weaknesses of that specific platform, and how to optimize campaigns within it.

At the same time, many DSPs have large minimums that almost immediately disqualify many brands without $100K to spend every month.

Trading Desks on the other hand, work with and offer access to multiple DSPs, so you can get the best of each, without the monthly minimums. And you also get access to managed services, including campaign optimization, to drive performance.

As a marketer, you may not have the time or expertise to go through 200 different evaluation criteria to understand if a certain tactic in a specific DSP will actually move the needle for you. If you’re working with a trading desk, however, you tell your account manager the campaign goal, and they will work with the available technology to help you realize that goal.  

AUDIENCEX is the largest independent trading desk, offering access to 18+ DSPs, search and social platforms in one place.

We are focused on sharing this enterprise-level technology to brands and agencies of any size, because we believe that everyone should be able to take advantage of these capabilities. It shouldn’t be that only the Fortune 500 companies of the world get to utilize technology that helps growth revenue.

We know that not everyone understands the technology and nuances of RTB. We know you may not have a team in-house to run your advertising on these technologies, or the bandwidth to create a strategy across them. But our team of campaign strategists and media buyers are available to help you build a solid media plan and execute your programmatic media buys to drive success.

Would you like to learn more? Contact us to schedule a time to talk about your campaign goals, and how we can help.