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Disclaimer: I have a bit of a horse in this race because I lead buy side product for AppNexus and one of our products, Console, can be used as a DSP. That being said, I’ve been studying this space for a long time and I’ll try to be as objective as possible.
Before you get started with your DSP evaluation, there are two very important things you need to know about the DSP space.
One: Media vs. Technology.
Inside the DSP category there is a hidden dichotomy between two distinct offerings (two distinct industries, really): media and technology. When evaluating DSPs the first thing you need to think about is whether you’re really looking for more of a media-first solution or more of a tech-first solution.
The choice is not as straightforward as you might think.
Are you an agency who is looking for a new vendor to put on your media plan and see how the performance compares to other DSPs, Networks and Publishers? Are you a marketer who really wants a full service solution and easy results? Are you a trade desk who wants to tap into the efficiency of programmatic buying but doesn’t have a team of traders? If any of these questions resonate, you’re probably looking for more of a media-first solution.
Are you a marketer with a data science team that you want to leverage to optimize your paid media? Are you a marketer who is looking to build a differentiated in-house media buying capability? Are you an agency or ATD with a built out trading team? Are you an ad tech provider looking to build on top of a commodity ad tech platform to accelerate your time to market and allow you to focus your development effort only on differentiated features? If any of these questions resonate, you’re probably looking for more of a technology-first solution.
Knowing up front whether you’re looking for media-first or technology-first will help guide how you evaluate solutions.
Two: How to tell if you’re talking to someone who will provide “media” vs. “technology”.
This one will be very confusing for industry outsiders. Every company in the DSP space (no matter if they’re really providing media or tech) will say that they are a technology company. The reason for this is rooted in the funding/capitalization side of the business. Ad tech is very over-invested and every company in the space is looking for an “exit” – either an acquisition or a public offering – to provide liquidity for investors (often venture capitalists). Historically speaking, at time of exit, “media” companies earn a valuation that is between 0.5x and 1.5x their annual revenue. So – for instance, if a media company is making $100M in revenue, that company could be valued between $50M and $150M. Not bad, right?
Well – on the other side of the aisle, “technology” companies earn a valuation that is between 6x and 10x their annual revenue. So that same company with $100M in revenue, if it were a “technology” company, would be worth $600M – $1B.
This is why every company in the space, regardless of whether or not they provide media or technology, will aggressively assert that they are a technology company.
If you have trouble telling the difference in the market, you are not alone, but this is something you’re going to have to look past in order to find the solution that will work best for you. Just remember this one straightforward rule of thumb: technology empowers you to do things, while media is something that someone else delivers for you.
How to decide which DSP to use if you’re looking for a Media solution:
If you’re looking for a media solution, the evaluation is fairly simple. These are the top variables that you should be thinking about:
- Which DSP is going to deliver you the best results relative to your KPIs (key performance indicators) – do they have case studies showing that they can excel at your use case with similar clients? Do they understand what you are trying to accomplish with your marketing?
- Level and quality of service you receive
- Insights about what happened and why in your digital ad campaign (e.g. why people stop clicking through to my website during a holiday period? Why did my CPA increase in the last 3 days of the month? What types of websites or 3rd party data segments will work best for me?)
- Audience integration: can the provider ingest your audience data easily and seamlessly with a high usersync/cookie match rate with your DMP?
- Breadth of offering: can the DSP operate in the Display, Native, Mobile and Video channels?
- How well developed are the DSP’s Private Marketplace capabilities? Do they have built in tools to troubleshoot deals?
- Does the DSP also own any media properties that might create a conflict of interest when selecting media?
- Do you feel comfortable sharing your data with the DSP and trust that they won’t use your data in a way that might be competitive? Some DSPs are owned by large internet/media companies who may actually own businesses that are competitive with you.
- What assurances can the DSP give you that they’re working to minimize the “ad tech tax” – fees taken out of your media budget by ad tech players that sit in between the advertiser and publisher?
A quick word about long RFPs:
Many folks who want a media solution have taken to the practice of running an RFP (Request For Proposal) asking would-be providers to answer hundreds of questions about capabilities. This is actually one of the leading causes of choosing the wrong DSP. A “check the box” evaluation process biases selection toward DSPs who have built the bare minimum tech to be able to check off all of the boxes on the RFP – regardless of how well that technology actually works.
And another quick word about bakeoffs:
It can be rational to run a bakeoff between 2-3 leading providers, however be aware that it’s practically impossible to construct a bakeoff that is not biased in some way. The three leading causes for bias in a bakeoff process are:
- Self competition (having DSPs bid against each other for your data segments)
- Unequal access to 1st party data (one DSP having pixels down on the brand[dot]com site to collect data while the other(s) do(es) you not)
- Unequal access to KPI/evaluation information (one DSP having more information about what “success” means than another DSP)
How to decide which DSP to use if you’re looking for a Technology solution:
This is where we can get a bit more technical. Here are some of the variables that you should care about in your evaluation:
- Does the DSP own their own servers or is the DSP built on top of AWS (Amazon Web Services)? The best tech providers will always own their own servers and have multiple data centers per region (having only one data center in a given region is risky for outages).
- Inventory access: does the DSP listen to 100% of the traffic from major SSPs and exchanges or do they throttle inventory access? (Note: DSPs built on AWS often throttle to save on server costs).
- Is the DSP part of an end-to-end ad tech platform or is it a point solution DSP that will require working with other ad tech companies if you need other parts of the ad tech stack (e.g. SSP, publisher ad server)?
- What is the employee breakdown of sales/services vs. product/engineering, the best technology companies will be close to 50% product and engineering and no more than 30% sales and services. Companies with less than 30% engineering should not be considered as strong technology partners.
- Event level data availability and fidelity: how quickly can you get event-level data? Does that event-level data match aggregated reporting available in the UI? The best tech providers will be able to generate event level data in under one hour and event level data should match up with aggregated reporting.
- Customization: how customizable is the DSP? Can you bring your own optimization algorithm or do you have to use a “black box” algorithm and/or rely on more manual optimization?
- Does the DSP have open API’s for you to build on top of? How comprehensive are those API’s? Does the DSP have API-only customers who have built their entire business on top of the APIs?
- How much influence do you have over the product roadmap? Are you able to talk directly to product managers?
- Does the DSP have a history of consistently delivering new product improvements on a regular schedule?
Since I do work in the space I’ll refrain from commenting on the benefits or drawbacks of specific competitors, but this is how I’d suggest looking at the DSP space when exploring which solution is right for you.