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Update: Due to the popularity of this topic we’ve created “Demand Side Platforms vs. Direct Partners: A Quick Guide“, which includes all of the information below, and more!
As an Account Manager on the 3Q Display team, I often get inquiries from clients wondering if they should be using a DSP (demand-side platform) or direct partner for purchasing display ad placements. In an ideal world, we’d recommend testing both. In this post, I’m going to take you through how each works, then break down the pros and cons to help you decide which will better suit your needs.
What’s the Difference?
A DSP is an automated platform that allows advertisers and agencies to purchase digital ad inventory from a variety of ad and data exchanges in real time. Some of the better known DSPs are The Trade Desk, Brightroll, and Doubleclick Bid Manager (DBM). DSPs are traditionally self service, requiring specific attention to targeting, frequency capping, location, time of day, device, and fold amongst campaign settings. Through a DSP, agencies are able to facilitate preferred deals, direct buys, and private marketplace deals. In addition, by running programmatic via a DSP, an advertiser is purchasing inventory in real time. The opportunities and capabilities of each DSP differ, but each is unique and powerful.
On the flip side, there are direct partners, also called managed partners. Some of the more common direct partners include Rocketfuel, Criteo, Magnetic, and Quantcast; each tends to have its own specialty, such as search retargeting, remarketing, etc. Rather than managing the campaigns on your own, direct partners do it for you and require a less hands-on approach on the buyer/agency side. This is not to discount the very robust DSPs that we work with on a daily basis, but sometimes our advertisers needs go beyond a DSP’s capability and reach. To ensure that direct partners are adhering to CPA goals, weekly calls are held between the direct partner and client or agency. Since someone else is managing the campaign, granular reporting may be not easily accessible.
You may be wondering if a direct partner still makes sense if you have an agency managing your display ads. The answer depends on what you’re trying to achieve. At 3Q, if a client is looking to employ more specific strategies such as search retargeting, or e-commerce remarketing, bringing in a direct partner may make sense.
Why Compare Them?
Advertisers exploring these two options typically fall into a few different situations. More times than not, advertisers have not dabbled in programmatic display and are wondering where to start. If they have utilized display, they’ve likely used a DSP or a direct partner. Either way, if they are using a DSP, they may be wondering if a direct partner is worth the investment or vice versa.
There are other options for display advertising, including working directly with a specific publisher, or purchasing off multiple exchanges with access to a publisher’s inventory, but working with a DSP or direct partner is becoming more common because it streamlines the process and will allow you to optimize media across multiple sources.
Let’s Break It Down
Here’s a breakdown of the pros and cons of both DSPs and direct partners to make your decision a little easier:
- Ability to place bids in real time across a variety of exchanges.
- Advanced Targeting: Ability to access many first- and third-party data segments to create audiences.
- First Party: CRM, email list of users, etc.
- Third Party: Aggregated segments that classify people’s jobs/location/interests, etc.
- PMPs (Private Marketplace or an invite only marketplace where high caliber publishers offer their ad inventory to a selected group of advertisers)
- Manual campaign management
- AM can manually set bids, day parting, frequency capping, geo targeting, etc., at any time.
- Transparent Data analysis: Ability to look at audience target and performance at a granular level.
- Ability to budget as needed (not restricted to IO).
- Have the ability to access many types of inventory – not just display, but video and native too.
- Each DSP has different targeting and audience list capabilities. Sometimes you have to use multiple DSPs in order to execute a strategy.
- A DSP is only as sophisticated as the expertise of the person utilizing it.
- Has the ability to tap into first- and third-party data options. Usually each partner will specialize in some sort of audience or targeting option.
- More robust:
- Some direct partners specialize in retargeting or dynamic ads that DSPs don’t always have access to
- Specialize in different offerings: in-stream video, remarketing display, etc.
- Direct Partners are able to access different inventory and targeting that may not be available in a DSP. Direct Partners specialize in their offerings, making it difficult to duplicate.
- Appealing to advertisers who don’t have enough time or resources to run the campaign themselves
- Can only access sites and inventory available through the exchange that they tap into (tends to lose out on valuable inventory).
- Usually the advertiser must sign an IO, and the advertiser is held accountable for the amount that month
- Must go through rep for all needs/changes
- Not very transparent
- Hefty management fee stuck onto media cost.
By placing and optimizing display campaigns, an advertiser can appear before their target market, increase brand awareness, and reach their KPIs. There is a strong case for both DSPs and direct partners; depending on your goals and objectives, you should be able to decide which will work better for you. If you have more questions about the differences listed here, please comment below and we’ll get back to you!
If you’re interested in learning more about how our clients are seeing so much success with our 3Q Display team, you can contact us here.