Reprinted from iMedia Connection

Overview:

DSPs are really just networks in disguise, they will make networks obsolete, and are a fad with no real staying power.  All false.  In just a few short months, the term demand-side platform (DSP) has become ubiquitous in the online advertising industry. It has become synonymous with all things real-time bid, exchange-sourced, display advertising — in many cases replacing the mainstay term “network” as the model of choice for advertisers. All kinds of media brokers are now scrambling to offer a DSP solution, relegating words like “network” and “optimizer” to the dustbin of display terminology. But as more platforms wade into the opportunity waters, it seems like an equal amount of fog is being injected into industry discussions. So I thought it would be an opportune time to lift some of that fog and expose several of the bigger DSP myths being perpetuated today.

Myth 1: DSPs are really just networks in disguise

False. There are some real differences between DSPs and networks, but recent trends have blurred those lines and given birth to this popular myth. At a fundamental level, traditional networks rely on a large stable of direct publisher relationships to deliver premium placements, easy reach, and ample scale, while owning the media risk and performance responsibilities. Many of these traditional networks live on today amid the DSP wave, successfully delivering campaigns along the way. But networks have begun to rely on exchanges as easy aggregation points for quick scale, and that is what started the move to DSPs. Then when the networks began to layer on automated optimization and advertiser-facing controls alongside their exchange-sourced media — either managed or self-service — they started to look like a lot like DSPs. This is how the whole DSP phenomenon began to accelerate. As networks began to rely heavily on exchange-sourced media while automating the trafficking process and exposing levers and knobs to the advertiser, some essentially became demand-side platforms. With the scale of the real-time bid exchanges and external facing controls, yesterday’s traditional ad network becomes today’s “hot” DSP. But there aren’t going to be as many DSPs as ad networks — read on for why.

Myth 2: DSPs will make networks obsolete

False. It will remain so until all available inventory is transacted on the exchanges. That said, DSPs are creating a “sofa bed” problem (neither a sofa, nor a bed) in the network business. At one end are networks — and publishers in some cases — delivering high-value inventory perhaps with custom or innovative creative. At the other end is the pure performance network that shoulders the media risk and runs cost-per-action performance campaigns. In this scenario, the exchanges are a fabulous source of cheap inventory for the performance networks. In the middle of this are the networks with a rapidly eroding publisher base. It is these networks that are in the greatest danger of obsolescence.

Myth 3: Using a DSP means you get brand-safe campaigns

False. It seems like brand safety is being treated like transparency in our industry. Everyone offers it in one form or another, but like transparency, brand safety means different things to different organizations. Just like transparency, everyone defines brand safety differently. There is one thing that separates effective brand safety from all the other forms of impression analysis and delivery verification out there today: preemptive filtering. Is your flavor of brand safety truly preemptive? Or is the “brand safety” you are getting really just post-impression analysis? Is it reactive?

Automatic brand safety is another of the industry myths perpetuated by networks rushing a DSP to market. Real brand safety, meaning a demonstrably safe environment for a brand advertiser to promote its message online, comes from truly preemptive brand safe filtering. But in practice, pre-impression analysis for relevance and safety is difficult to do. Evaluating a billion impressions a day for applicability takes a robust platform and intelligent integration with all of the real-time sources – and this requires investment in technology and people to do it right. But preemptive filtering pays huge dividends in efficiency and thus returns. With truly preemptive brand safety, you only buy what is safe and there is no waste. No wasted targeting, optimization, time, or ad-spend.

Myth 4: There are dozens of DSPs today, and there will soon be hundreds more

False. There is no shortage of organizations claiming to be a DSP. But you can count on one hand the number of solution providers able to deliver a truly successful DSP campaign (perhaps even minus a couple of fingers). In the heyday of networks, there were reportedly more than 300 ad networks out there, but few had a significant amount of their own proprietary technology. It is the large, technology-rich networks that have successfully transitioned to become real DSPs. The rest are scrambling to rely on relationships for their technology, as they had little or no technology of their own to expose when the DSP tsunami hit our industry’s shores. Because of the technology required, there will be far fewer successful DSPs than there were ad networks. Dozens? Maybe somewhere down the line. Hundreds? No way.

Myth 5: DSPs are a fad and will not have real staying power

False. Far from a fad, the DSP trend is about control, efficiency, and profitability. Advertisers never wanted to outsource all of their control; they did it for the quick scale and reach that networks provided. Now that the exchanges have matured and have exposed real-time bid APIs, control can move back to the advertisers, while retaining all of the scale and reach that networks can offer. Once we go down this road, there will be no turning back. The DSP trend is causing a fundamental change in the nature of how display media is used.

With any significant new trend, there is bound to be some confusion. Hopefully this clears the air around some of the more prevalent myths in our industry. There are sure to be more myths and many different viewpoints, but this is a start. What is certain is that the trend toward the self-service DSP model is going to have some staying power. It has already made an irrevocable impact on how display media is brokered and continues to drive upheaval. It was way back in 475 BC that the Greek philosopher Heraclitus said, “The only constant in life is change,” and those words are just as true today. The display advertising industry has gone through constant change since Hotwired ran the first banner ad in 1993, and the nimble organizations will be the ones that continue to flourish.

Nearly every online marketer is concerned with transparency and brand safety.  These seem to be the biggest roadblocks to brands embracing display.  A quick search on AdExchanger reveals a dozen articles on both subjects in the last few months.  We’ve all talked about it yet there still seems to be more misconceptions than fact surrounding what is possible when it comes to real brand safety.

In April of 2010 Winterberry Group LLC reported that “transparency and brand safety have conspired to inhibit billions in potential online display ad spending.”  Brand safety continues to undermine a broad investment in display advertising by brand advertisers despite the obvious efficiencies being delivered by today’s ad networks.  This is because truly preemptive brand safety is difficult so most have settled for simple post impression verification and are therefore not getting a truly brand safe environment for their message.  But the DSP trend changes all that.

With the advent of contextual display advertising, a host of new advertising opportunities opened up for marketers across every industry.  Whether contextualization is done at the site level (i.e. ESPN.com is about sports) or at the page level (i.e. automotive content on CNN.com), the ability to target ads around content—in addition to demographic and behavioral profiles—is pretty powerful stuff.  But with these big opportunities comes an equal amount of risk.  Imagine an automotive ad next to a news story about a horrific car crash or an ad for a vacation package next to tsunami news coverage of the same destination.  We see it in contextual search as well as display.  It’s enough to make any brand marketer anxious about any sort of online advertising.

The good news is that advances in targeting technologies and demand-side platforms (DSP) with real-time bidding (RTB) are creating truly brand safe environments for brand advertiser.  But like transparency, everyone defines brand safety differently.  There is one feature that separates effective brand safety from all the other forms of impression analysis and delivery verification out there today.  It‘s preemptive brand safety.  Is your trusted flavor of brand safety truly preemptive?  Or is the brand safety you rely on from your DSP really just post impression analysis disguised as safe filtering?  This is another great myth in our industry often perpetuated on purpose only because preemptive is difficult to pull off.

Real brand safety, meaning a demonstrably safe environment for brand advertisers to promote their message online, comes from sanitizing the ad space before the ad is served.  Of course pre-impression analysis for relevance, performance and safety is very difficult to do so it’s the least prevalent form out there.  Evaluating billions of impressions a day for relevance takes a robust platform and deep integration with all of the real-time bid aggregation points.  But it pays huge dividends in both safety and efficiency by guaranteeing quality impressions and eliminating the need for pass-backs.  With truly preemptive brand safety you only buy what is safe with no waste in the equation.

But when pages are not categorized for meaning in advance, ads get served next to inappropriate content and the advertiser simply gets a report indicating that it has happened again.  That isn’t preemptive brand safety, that’s reactive reporting.  It’s the equivalent of closing the gate after the cows get out (and wander down the middle of the highway disrupting traffic and endangering your brand investment).

Everyone knew it would take third-party providers to deliver real brand safety.  Back in March, Jonathan Margulies at Winterberry Group acknowledged as much right here on AdExchanger.  It isn’t in the publisher’s best interest to exclude their own content from advertising—for a publisher the more bidders the better.  The interest in such technology falls on the demand side but most advertisers lack the engineering infrastructure to build such a solution.  In the display advertising landscape, providing preemptive brand safety is the responsibility of the demand-side platforms.  Various platforms provide this ability in varying degrees – from zero to truly preemptive.  Ask the question.  Make sure you are getting the truly preemptive kind that boosts efficiency and return on spend.

Reprinted from AdExchnager.com Data-Driven Thinking column, a media community blog containing fresh ideas on the digital revolution in media. Follow LucidMedia on Twitter @lucidmediaVIP and follow AdExchanger.com @adexchanger.com.