What is a DSP, and what is the difference between a private marketplace and the open exchange?

A DSP, or demand side platform, is the software an advertiser uses to bid on ad inventory, and the private marketplace and open exchange are two different places it can shop. Understanding the difference is how you tell whether a programmatic proposal is buying quality or buying cheap.

What a DSP does

A publisher makes an ad slot available. The DSP receives the bid request, checks it against your targeting and budget rules, decides what the impression is worth, and bids. All of this happens while the page or app loads. The DSP is also where your frequency caps, blocklists, verification vendors, and reporting live. It is the control panel, not the inventory.

Open exchange versus private marketplace

• Open exchange. Anyone can bid. The largest pool of inventory, the lowest CPMs, and the widest quality range. Fine for broad retargeting where reach matters more than context.
• Private marketplace, or PMP. An invitation only auction where a named publisher makes specific inventory available to selected buyers at a negotiated floor price. Higher CPM, known placements, better viewability, and real brand safety. Most premium CTV inventory trades this way.
• Programmatic guaranteed. A fixed volume at a fixed price with a named publisher. Closest thing to a traditional insertion order.

Questions to ask any vendor

Ask what share of your spend runs in the open exchange versus PMP deals, and ask for a placement report listing domains and apps. Ask which verification vendor is measuring viewability and invalid traffic, and whether you can see that reporting. Ask whether the DSP fee is disclosed separately from media.

If a vendor cannot or will not answer those three questions, the problem is not that programmatic is complicated. The problem is that you are not being told where your money goes.

Related: What is programmatic display advertising?, Avoiding ad fraud and bad placements, platforms we manage.