Demand-side platform (DSP) is one of the hottest media trends right now, but what most people fail to understand is that it is merely a buying mechanism. The real value lies in the data management platform (DMP), which acts as the brain that tells the DSP which ad impression to buy. In the Western ad tech ecosystem, third-party DMPs like BlueKai serve as the central nervous system that various DSPs plug in for intelligence. In some instances, many Western DSPs such as Turn will often combine their own first-party data with BlueKai's third-party data to create custom audience segments.
The Western ad tech ecosystem is the ideal way of operation. However, the picture looks quite different in China.
Even though there are quite a few DMP companies in the Chinese tech ecosystem, none of the major DSPs in the China market are actively using them. What happens instead is that all the DSPs use their own third-party data collected from direct publisher relationships. With no de facto standards in third-party DMP data, Chinese marketers have zero transparency in knowing the exact data that is being used for targeting. Hence, the local DSPs are all moving toward a strategy of a first-party DMP offering to prove their value add, and most of all for vendor lockdown. In the end, whoever controls the client's data will control the bulk of the marketing budget. To make things more complicated, agency-trading desks (ATD) and third-party tracking vendors like Miaozhen also have a DMP offering. Of course, marketers have the option of hosting their own DMPs internally.
There are advantages and disadvantages for each decision. The choices are:
DSP hosted DMP
Third-party tracking hosted DMP
ATD hosted DMP
Internally hosted DMP
: Many DSP vendors like to bring up the selling point for the DMP is the lack of data loss, because the first-party cookies that were collected could be directly mapped to the DSP inventory. This allows advertisers to maximize the use of their cookie pool for tactics like retargeting.
: The issue with this model is data security and transparency. For example, many DSPs may be tempted to use cookies collected from one brand's website for retargeting on a direct competitor's campaign. If the data is hosted and managed by the DSP, actions like that will go unnoticed and unchecked.
The best part of this solution is that third-party tracking vendors already own lots of brand data. For example, all the cookies collected from ad impressions. This data can in turn be used to enlarge the retargeting cookie pool or as the basis of analysis for look-alike targeting.
However, because third-party tracking vendors cannot actually buy inventory, they would have to conduct cookie mapping with DSPs. From working with Miaozhen, we've seen between 20 percent all the way up to 60 percent mapping rate depending on the DSP. This means there could be significant data loss due to mapping discrepancies.
Hosting the DMP with an ATD solves the single DSP lockdown issue because ATDs often work with multiple DSPs. So having them host the DMP give clients greater flexibility based on the campaign objectives.
Again, the core issue here is with cookie mapping. Because many ATDs do not have their own proprietary technology stack, they still have to rely on the DSPs for cookie mapping, which results in loss of usable cookies.
Hosting a DMP internally is also a viable option because cookie data can be more easily integrated with the customer relationship management (CRM) database for some additional targeting tactics. For example, traditional retargeting is based on user visits to a particular page on the website. But by linking the DMP to the CRM system, we can open up some interesting dimensions like: retargeting based on call center inquiries, or retargeting based on offline sales transactions.
The issue here is the lack of resources and expertise from internal IT teams. Cookie data is unique in that it must be used in a timely manner, or it loses its viability entirely. Also, it has to be collected and used in real time by the DSPs. This differs greatly from maintaining transactional databases or snapshot based data warehouses.
The choice for marketers is a difficult one, as all contenders are viable. Marketers have to gauge their own options by focusing on their core business objectives. For example, leading Chinese e-commerce company Jingdong Mall (JD.com) partners directly with DSP vendor MediaV for hosting its DMP. Because JD's main objective is to drive retargeting traffic through its already massive traffic, it doesn't want any cookie mapping data loss from working with other vendors in this space.
Even though the Chinese ad tech ecosystem is a bit chaotic at times, brands can still make informed decisions by focusing on core business objectives.
This article originally published at ClickZ here
ClickZ is a Mashable publishing partner that provides marketing news and expert advice. This article is reprinted with the publisher's permission.