A demand-side platform (DSP) is the software that an advertiser uses to bid for ad space in automatic auctions. Each time someone opens a web page, an app or a streaming show that has an empty ad slot, the slot is offered for sale. The DSP decides, within a few milliseconds, whether to bid for it and how much to offer. Advertisers are called the demand side, because they want to buy ad space, and that is where the name comes from.
The offer arrives as a bid request, a short message from an ad exchange, the marketplace where these auctions run. A bid request describes one impression, meaning one showing of one ad to one person. It says which website or app the slot is on, the size of the slot, the type of device, the rough location and, where it is available, an identifier for the browser or phone. The exchange usually waits only about a tenth of a second for the answers.
Here is a typical case. A food delivery app wants more lunch orders in Ahmedabad. Its marketing team sets up a campaign in the DSP with three rules: show ads only between 11 a.m. and 1 p.m., only on phones in Ahmedabad, and bid at most ₹90 CPM. CPM is the price for a thousand impressions, so ₹90 CPM is 9 paise for each showing. At 12:10 p.m., a bid request arrives for a slot in a cricket score app, on a phone in Ahmedabad. The DSP's model predicts how likely this person is to place an order. With an identity graph, which links phones, browsers and email addresses to one person, it finds that this phone belongs to a past customer. So it bids ₹85 CPM. For another phone with no history, it bids only ₹40. For a phone in Vadodara, it does not bid at all. If its bid is the highest, the food delivery ad appears in the cricket app.
A large DSP answers millions of bid requests every second, so every decision is automatic. The marketing team sets only the rules, the budget and the goal. The prices are explained further in impressions and CPM and in real-time bidding (RTB).
The DSP usually keeps a share of what the advertiser spends, often 10 to 20 per cent. After the ads run, ad verification checks that each impression was seen by a real person, on a suitable page. One common use of a DSP is retargeting, which bids for people who have already visited the advertiser's website.
DSPs face two changes. Third-party cookies, which let a DSP recognise one browser across many sites, are being restricted. And much ad space sits inside Google, Meta and Amazon, the walled gardens, which an independent DSP cannot buy. So independent DSPs compete for the rest: the open web, apps and connected TV.