Demand Side Platform for Programmatic Advertising Market

Market Overview

A Demand Side Platform (DSP) is a technology platform used in programmatic advertising to simplify and automate purchasing digital ad inventory.  Advertisers and agencies use DSPs to bid and buy ad impressions in real-time auctions across multiple digital channels.  DSPs allow advertisers to target specific audiences based on demographic, behavioral, and contextual criteria, optimizing ad campaigns for efficiency and relevance.  Some key features are real-time bidding, audience targeting, cross-channel advertising capabilities, and advanced analytics for campaign optimization.

The Demand Side Platform for Programmatic Advertising market share has grown significantly due to increased programmatic advertising adoption, which provides opportunities for cross-channel campaigns, data-driven decision-making, and real-time optimization.  However, challenges such as concerns about ad fraud, privacy regulations, and the inherent complexity of the programmatic ecosystem highlight the importance of advertisers carefully navigating this environment.  DSPs continue to evolve, with trends such as connected TV integration and artificial intelligence influencing the future of programmatic advertising.

Market Dynamics

Global Demand Side Platform for Programmatic Advertising Market Drivers:

Rising Digital Ad Spending

The ongoing increase in digital advertising spending is fueling the growth of Demand Side Platforms (DSPs). Global digital ad spending is expected to grow significantly, with advertisers allocating more of their budgets to digital channels. For instance, in 2023, global digital ad spending will exceed USD 600 billion, representing a 9.5% annual increase. This was the first year that digital ad spending exceeded this threshold. As advertisers become more aware of the effectiveness of digital channels, they are turning to DSPs to optimize their ad spending through programmatic buying, ensuring targeted and efficient distribution across multiple online platforms.

Furthermore, the Interactive Advertising Bureau (IAB) predicts that digital video ad spending in the United States will increase by 17% in 2023 to USD 55.2 billion. This would account for nearly half of the TV/video market (47%). Major brands and advertisers are shifting their resources to digital channels because of their ability to provide precise targeting, real-time optimization, and measurable results. Companies such as Procter & Gamble, Coca-Cola, and Unilever have significantly increased their digital ad spending over the years, recognizing DSPs' potential for reaching consumers across multiple digital touchpoints.

Again, the COVID-19 pandemic has accelerated the adoption of digital advertising as businesses seek more adaptable and measurable marketing solutions. As people spent more time online, advertisers turned to DSPs to capitalize on the increased digital activity. The ongoing growth of digital ad spending, combined with the flexibility and efficiency provided by DSPs, highlights the importance of these platforms in modern advertising strategies. As digital ad budgets continue to rise, the Demand Side Platform for Programmatic Advertising Market trend is expected to stay strong.

Global Demand Side Platform for Programmatic Advertising Market Restraints:

Privacy Regulations

The global market for programmatic advertising faces challenges due to privacy regulations, such as GDPR in Europe and CCPA in California, which impose restrictions. The purpose of these regulations is to safeguard user privacy and empower individuals to have authority over their data. Although crucial for protecting consumer rights, they impact how advertisers and DSPs manage data, resulting in heightened intricacies and restrictions. Advertisers and Demand-Side Platforms (DSPs) must allocate resources towards implementing compliance measures to conform to privacy regulations. This encompasses implementing mechanisms to acquire user consent, guaranteeing data encryption, and offering users the choice to opt out of data processing.

Also, Compliance expenses can impose financial pressure on budgets. For instance, By the conclusion of 2020, approximately 27% of users in the United States employed ad blockers. Regulations such as GDPR have a global impact, requiring companies worldwide to adhere to them when managing the data of users in regions covered by the rules. The global significance of this impact emphasizes the necessity for a uniform method to ensure data privacy in programmatic advertising.

Global Demand Side Platform for Programmatic Advertising Market Opportunity:

Emerging New Technologies

The ongoing advancement of technologies, such as artificial intelligence and machine learning, provides DSPs with the potential to improve targeting accuracy, optimize campaigns in real-time, and deliver inventive solutions for advertisers. Integrating these technologies can offer a distinct advantage in terms of competition. Using AI technologies, DSPs can enhance their ad targeting and campaign optimization capabilities. AI algorithms can analyze extensive datasets in real-time to detect patterns, comprehend user behavior, and make forecasts regarding ad performance. These outcomes can result in enhanced accuracy in reaching specific audiences, heightened interaction, and improved profitability for advertisers.

Additionally, IBM reported that in 2022, 25 percent of participants indicated that they were utilizing multi-cloud to take advantage of various application services such as AI/ML, big data analytics, business intelligence, IoT, and others. Artificial intelligence-powered demand-side platforms (DSPs) facilitate dynamically optimizing creative content, enabling advertisers to automatically generate and personalize advertisements based on user preferences, context, and behavior. This guarantees that advertisements are pertinent and captivating to every user, enhancing the campaign's effectiveness.

Therefore, Through AI-powered analysis and abilities, advertisers can enhance the comprehension of their intended audience, optimize their advertising expenditures, and achieve more favorable business results. As the utilization of AI in advertising expands, demand-side platforms (DSPs) that embrace these technologies will have a strong advantage in leveraging the changing demands of the market.

Regional Analysis

North America Dominates the Global Market

The global demand-side platform for programmatic advertising market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North America is the most significant global demand-side platform for programmatic advertising market shareholders and is estimated to grow at a CAGR of 22.9% over the forecast period. North America is expected to dominate the market due to the growing adoption of demand-side platforms for programmatic advertising, extensive use of online applications and smartphones, and the community's reliance on the internet. In 2023, the United States possesses one of the largest smartphone markets globally, boasting a user base exceeding 310 million. Consequently, over 90% of Americans have smartphones. 

Furthermore, a survey conducted in 2023 found that 96% of individuals in the United States between the ages of 18 and 29 possess a smartphone. 94% of smartphone users are located in the youngest adult age group. The subsequent highest percentages consist of individuals aged 30 to 49 (89%), 50 to 64 (73%), and 65 and older (46%). Furthermore, Statista predicts that digital advertising expenditure in the United States will reach USD 298.4 billion by 2024. Implementing a demand-side platform for programmatic advertising enhances ad visibility and optimizes ad performance for the intended audience, stimulating market expansion.

Asia-Pacific is anticipated to exhibit a CAGR of 23.0% over the forecast period. The demand side platform for the programmatic advertising market in the Asia-Pacific region is expected to experience substantial growth, thanks to the presence of a large target audience on popular online platforms. The utilization of demand-side platforms (DSPs) in programmatic advertising offers significant benefits to advertisers in emerging countries like India and ASEAN, thereby driving market growth.

Moreover, many countries in the Asia-Pacific region have bypassed conventional desktop usage; now, most internet users primarily access content via mobile devices. In June 2023, the number of individuals in China accessing the internet through a mobile device reached 1.08 billion. This represents an increase from approximately 1.07 billion as of the conclusion 2022. China's internet penetration rate increased by 0.8 percentage points from December 2022 to 76.4% in 2023. DSPs in the area must adjust to the prevailing mobile-centric environment by providing solutions that specifically address mobile advertising formats and preferences.

Furthermore, the increasing prevalence of online commercial transactions is a significant catalyst for the growth of programmatic advertising in the Asia-Pacific region. The projected growth rate for China's e-commerce market is 9.9%, reaching CNY 15.2 trillion (USD 2.2 trillion) by 2023. The growth is propelled by the transition of consumer preferences from traditional brick-and-mortar shopping to digital online shopping. Advertisers utilize Demand-Side Platforms (DSPs) to effectively reach users with tailored advertisements, particularly during significant shopping occasions, as online retail and a technologically adept consumer demographic continue to expand.

Europe is a well-established and varied market for programmatic advertising, with countries differing in their digital adoption rates, advertising preferences, and regulatory frameworks. The programmatic landscape in Europe is distinguished by a significant focus on data privacy and adherence to regulations such as the General Data Protection Regulation (GDPR). Due to concerns regarding confidentiality and cookie restrictions, there is a revived interest in contextual advertising in Europe. Advertisers seek Demand-Side Platforms (DSPs) that effectively utilize contextual targeting to deliver advertisements relevant to web page content. This ensures that they are in line with privacy regulations.

Nevertheless, the growth of programmatic digital display ad spending reached an unprecedented low in 2022 due to advertisers' anticipation of a possible economic downturn. Based on a report by IAB Europe in November 2023, agencies are worried about sustainability and consider it the main obstacle to programmatic investment. The report highlights the continued significance of conventional metrics such as CPMs and CPVs while emphasizing the increasing importance of quality metrics such as viewability, fraud, and brand safety. 

Segmental Analysis

The global demand-side platform for the programmatic advertising market is segmented based on product type and application.

The market is further segmented by product type into RTB (real-time Time Bidding), PPB (Programmatic Premium Buying), Cloud Based, and On-Premise.

RTB (real-time Time Bidding) holds a significant share of the market.

RTB (real-time Time Bidding)

Real-time bidding is a programmatic advertising technique in which ad impressions are purchased and sold through instantaneous auctions. Within the RTB model, advertisers compete for ad space by offering bids for each impression, and the ad belonging to the highest bidder is promptly shown to the user. Real-time bidding (RTB) allows advertisers to selectively target specific audiences by leveraging different parameters, thereby maximizing the value of each impression. This dynamic and automated process enables the optimal allocation of advertising budgets, accurate targeting, and immediate campaign modifications. RTB is renowned for its adaptability, as it serves the needs of both purchasers and vendors in a fiercely competitive and prompt marketplace.

PPB (Programmatic Premium Buying)

Programmatic Premium Buying is the automated acquisition of high-quality advertising space using programmatic techniques. Programmatic Premium Buying differs from RTB in prioritizing high-quality, guaranteed placements on premium publisher websites rather than dealing with unsold or remnant inventory. Advertisers engage in negotiations and successfully obtain high-quality advertising space by utilizing private marketplaces or establishing direct agreements with publishers. This strategy guarantees the protection of the brand's reputation, high-quality exposure, and the ability to reach specific and unique groups of people. Advertisers who desire premium placements and direct relationships with publishers prefer Programmatic Premium Buying, as it provides a high level of control and assurance in the ad placement.

The market can be bifurcated by application into Retail, Automotive, Financial, and Telecom.

Retail is the most common application in the market.

Retail

The retail industry extensively utilizes programmatic advertising, with DSPs playing a crucial role. Retailers use Demand-Side Platforms (DSPs) to strategically reach and captivate consumers through tailored and contextually appropriate advertisements. Programmatic advertising enables retail brands to optimize campaigns by leveraging user behavior, preferences, and purchasing history. For instance, a retail demand-side platform (DSP) could empower a clothing brand to reach out selectively to users interested in particular products, thereby advertising pertinent items or exclusive deals in real-time. Retailers can optimize the effectiveness of their digital advertising by dynamically adapting ad content and bidding strategies, resulting in increased online and offline sales.

Financial

The financial industry utilizes DSPs to carry out precise and data-oriented advertising campaigns. Programmatic advertising is used by banks, insurance companies, and financial service providers to engage with their intended audience effectively through personalized communication. DSPs empower financial advertisers to enhance their targeting parameters, guaranteeing that ads are presented to users with precise economic interests or behaviors. For example, a financial demand-side platform (DSP) could focus on users interested in investment content, credit cards, or mortgage information. Programmatic advertising in the financial sector enhances lead generation, fosters brand awareness, and facilitates the promotion of diverse financial products and services.

Impact of covid-19

The COVID-19 outbreak is expected to curb the growth perspectives in the first half of the forecast period. The downfall of the service sector and the complete shutdown of multiple organizations, owing to financial crises, hinders the market growth. Impressive data consumption and expenditure of the customers on the online applications and site is expected to lure in many players towards the use of digital advertisement mode, further driving the market growth.

Recent Developments

• January 2024- Albertsons will collaborate with Criteo to enhance its retail media services.
• November 2023- The Trade Desk and Circana formed a strategic alliance to enhance retail data for marketers in Australia.
• September 2023- Dentsu AT introduced CO2-optimized delivery of programmatic advertising campaigns.