“A typical DSP charges advertisers a percentage of the media dollars that flow through its platform. An advertiser that spends $10M per year might pay its DSP $1M. At the most basic level, DSPs make more top line revenue by growing advertiser budgets.
DSP expenses, however, have nothing to do with advertiser budgets. After covering overhead like people and facilities, DSP costs scale with the number of bids the platform must process. The core technology of a DSP becomes more expensive to operate as the volume of incoming bid requests grows. Every lost auction is pure cost to a DSP, driving down its profitability.
The trouble with unified auctions is that they drive up bid requests without bringing more revenue into the system. The value proposition of a unified auction hinges on increased bid density — more demand sources participate in every impression. But the byproduct of increased bid density is decreased win rates. Only one demand source can win an impression, so as more bidders participate, more of them lose. A spike in lost auctions is an economic crisis for a DSP.”
Tagged: Ad Tech, LiveRail, DSP

Explore more quotes:

About the author

This page was created by our editorial team. Each page is manually curated, researched, collected, and issued by our staff writers. Quotes contained on this page have been double checked for their citations, their accuracy and the impact it will have on our readers.

Kelly Peacock is an accomplished poet and social media expert based in Brooklyn, New York. Kelly has a Bachelor's degree in creative writing from Farieligh Dickinson University and has contributed to many literary and cultural publications. Kelly assists on a wide variety of quote inputting and social media functions for Quote Catalog. Visit her personal website here.

Kendra Syrdal is a writer, editor, partner, and senior publisher for The Thought & Expression Company. Over the last few years she has been personally responsible for writing, editing, and producing over 30+ million pageviews on Thought Catalog.