The bustling and sad DSP

1. What is a DSP?

I'm used to understanding any one technology from two angles 1. It solves what problem 2. For whom it serves. For DSP, I think DSP is to solve the problem of the complexity and ROI of the programmatic purchase of advertisers, which is born to advertisers. If the advertising industry is simplified into: media (supply), advertising platform (ADX) and advertisers (Demand). The role of DSP is in the process of programmatic purchase, for advertisers to optimize the effect of delivery.

From this point of view, DSP is a very promising direction, it eliminates many of the previous manual delivery of the problem of asymmetric information, to protect the interests of advertisers, the existence of DSP is "no problem."

2. Independent DSP's living space

At a single point of view the DSP may miss some problems, and sometimes we need to look at the production space of the DSP from a more perspective. In order to better understand the concept. I divide the advertising technology company into several categories.

1. Media advertising platform (ADX with own supply)
2. No Media advertising platform (ADX without supply)
3. Standalone DSP (Solo DSP)

2.1 Media Advertising Platform:

Such companies will cover media, trading platforms, and advertisers. such as Google, Facebook and Baidu. Behind the Top100 app at home and abroad, almost every app has a media advertising platform behind it, but there are a lot of small. This type of company is characterized by multi-objective optimization issues: the need to serve advertisers, but also to improve their media monetization capabilities/revenue, and needs to protect the user experience. In many cases, there is a contradiction between increasing advertiser ROI and maximizing media monetization. This type of company will be unable to fill their own, or their ability to become poor capacity of traffic, docking outside the well-known DSP, in order to achieve the maximum media monetization purposes.

2.2 No Media advertising platform:

This kind of advertisement platform tries to incorporate the media which the market cannot put into the advertisement platform construction, including many medium and large traditional media, some media do not want to be monopolized by Google and FB, willing to choose the service better SSP/ADX. The United States AppNexus is such a successful trading platform, absorbing a lot of quality media. They will try to maintain a fair bidding environment, external to a large number of DSP companies, but also have their own advertising platform to meet the needs of their advertisers.

AppNexus is a typical representative of this kind of company, WPP shares 15%, Microsoft also shares, valuation has reached 1.2 billion U.S. dollars, said Ali also shares. Its profit model is to extract 10% of the platform's advertising turnover. The net revenue is now about $200 million, and the total flow of advertising has been $2 billion, which is said to have been profitable.

2.3 Independent DSP Company:

Independent DSP companies do not have fixed media, without their own trading platform (ADX). This kind of companies do not worry about the interests of the media, can wholeheartedly for the Advertiser service, advertisers happy, this position is the most pure, noble. DSP is similar to the SEM of the search era, but DSP focuses on non-search ads, suitable for pictures and videos and so on. In addition, SEM mainly through a number of ways to improve advertising (search terms, bids, etc.), advertisers directly see the effect of improvement. The DSP is mainly based on users and scenarios to bid.

Compare these patterns together, each of which has a section for advertiser service, a simple comparison:

1. There are media advertising platform: advertising platform has its own advertisers, advertising platform also represents the interests of these advertisers. Because advertisers too much, as an advertising platform, it can only develop an open rule, advertisers free and fair competition. Each advertisement platform has its own play, the marketing efficiency promotion often needs the traditional sem/agent company through the Manual + tool way to carry on the operation. This platform, while also docking external DSP, but its own advertisers and external DSP advertisers, is still two sandbox (sandbox), unable to provide unified advertising services tools. In the long run, the advertising platform more hope that the DSP advertisers can be integrated into the advertising platform inside.
2. No media advertising platform: In this mode, the ad trading platform will also be docking some advertisers, these free advertisers are actually a DSP, participate in the advertising platform bidding activities. In the auction process, they may enjoy the first choice, if the internal and external bids are the same, will be preferred to their own advertisers. From a media point of view, it doesn't care where their ads come from.
3. Independent DSP: This is a relatively pure mode, the DSP can be more flexible to adjust the bid proposal. Initial bids can be exploratory, understand the bidding environment, in the understanding of the bidding environment, can be targeted to make strategic adjustments to optimize the bid results. Part of the work requires algorithmic analyst input to get the best results. It satisfies the advertiser's interests at the same time, can also try to save the cost of purchasing traffic.

3. Why is DSP sad?

With so many things to say, DSP looks like a good technology to help advertisers get a better ROI. So what's the challenge, and why is Facebook sad to leave?

3.1. High-quality media provides DSP with limited flow capacity, high demand for DSP.

High-quality media are often reluctant to introduce too many external DSPs because they need to prioritize the needs of their own advertisers, who are often introduced by their own sales or agents. Of course, there will be a part of the traffic will be introduced to external DSP, cooperation including PDB, Prefer deal and private auction-based, the entire process needs to involve the business process. DSP can be used in these modes, but the size of the flow has a certain limit.

Here are some patterns of precedence. Header tag is a lightweight and excellent media bargaining model that began to pop up in the year: the site is negotiated directly with the partner, and the bargain takes place before the action of the ADX is invoked. Other centralized mode DSPs have the opportunity to participate directly.

3.2 In the open advertising trading platform, there is a lot of false traffic.

AppNexus, a leading foreign trading platform, mentioned last year that 60% of the company's traffic is false traffic, which will be intercepted by the platform and not participate in advertiser bidding to protect the interests of advertisers.

At the beginning of March, Facebook withdrew from its open-traffic DSP, and the news was also being scrambled because of the low traffic quality of the trading platform. Facebook was liverail at the time, with a public draft saying that 75% of the traffic was low quality. Facebook is said to have more than a sizable (nearly 100) team doing anti-cheating work, so this is a high-cost job. Too much investment in false traffic is a cost-effective job, not a priority issue that Facebook needs to address at this stage.

Therefore, the open market bidding, if there is no eyes, early choice to give up.

4. A few small points of view on DSP

Point one: DSP away from the public adx long tail flow

A) Many non-media advertising platform (ADX) in the world to pursue the scale of traffic, although the intention to control the quality of traffic, but a variety of traffic fraud, a lot of ADX also powerless. The largest and most famous ADX in the United States is Appnexu and OpenX, with a media volume close to 100,000, a nearly 1 million, and the water flow inside is an absolute black data. AppNexus official said 65% is false traffic, compared to Appnexu,openx's website more long tail, low-quality traffic will exceed 80%. If the DSP is unsure whether a traffic is a low-quality traffic, then rejection is the best countermeasure.

Opinion two: The effect of middle and long tail advertisers are strong demand for DSP

Mid-long tail advertisers are inexperienced in how to effectively promote online advertising, they are also very sensitive to price and effect, they need some service agencies to provide targeted services. DSP is a representative of the service of advertisers, it can help the effect of advertisers, in multiple channels to run automatically, and to carry out effects tracking and promotion.

Brand advertising for the service of the DSP will be more critical, because the DSP for the media control ability is weak, it is difficult to form a brand communication ability, so although some brands are trying to put DSP, long-term brand or may be inclined to have media advertising platform directly docking.

View three: The growth of mobile traffic to the opportunities and challenges of DSP

Growth opportunities: Mobile monetization is becoming more and more clear, and users are increasingly accustomed to the monetization of information flow, open screen and video pre-paste. In addition, mobile products are experimenting with innovative interactive experiences, including VR, in AD mode. Mobile advertising traffic grows rapidly and forms are diversified. Many mobile media are dissatisfied with the ad fill rate, so they need to introduce more demand to participate in the fill, which gives the DSP a lot of opportunity.

Traffic challenges: High-quality traffic is always scarce resources, at present, mobile media, high-quality traffic concentrated in the limited app, the flow of these apps in the acceptance of external independent DSP degree will also vary, so the more the DSP in mobile traffic will be subject to the media restrictions.

In the United States, for example, the majority of mobile time is concentrated in the hands of the mobile giants, but also more concentrated than the current PC is more obvious. Independent DSPs need to squeeze space into the advertising platform giants.

Opinion four: The opportunity of the independent DSP in the e-commerce and service

Mobile e-commerce in the promotion of marketing has a great demand, as long as the ROI is positive, it can be said that the promotion of the budget almost unlimited. Any business model, in the final analysis, sells the service or product to the target user. There are also many opportunities for innovation in mobile e-commerce, and many DSP providers can combine innovations with e-commerce advertisers (such as value users) to reach more targeted users and provide richer forms of advertising.

In addition, The Advertiser service is a strong demand, The advertiser's first budget is usually a tentative investment. If you can continue to get the same advertiser's multiple budget input, it is the real sustainable service business. Therefore, the DSP only provides a better service than the general platform, advertisers have to choose the reason for DSP again!

Point five: Independent DSPs require more data support services

The data source is actually the weak point of the independent DSP, although many DSPs vigorously publicize this. Although DSP has the opportunity to meet a lot of long-tail mobile traffic, see a lot of devices and people, but the type of data is limited to advertising display and click Data. No comprehensive and deep modeling of users, lack of social, search, and e-commerce data. Therefore, many DSP will introduce the third-party data source, improve the user's portrait ability.

The bustling and sad DSP