DSPs are integral to the broader concept of programmatic advertising, which refers to the automated buying and selling of online advertising. Programmatic advertising utilizes technology to streamline the process, making ad transactions more efficient. DSPs play a crucial role by serving as the interface through which advertisers can participate in these automated transactions.

A key feature of DSPs is real-time bidding (RTB). RTB is an auction-based method where ad impressions are bought and sold in real time. When a user visits a website, an auction takes place within milliseconds to determine which ad will be displayed. DSPs submit bids on behalf of advertisers, and the highest bid wins the ad placement. This ensures that ads are shown to the most relevant audience.

DSPs utilize advanced audience targeting techniques to ensure ads reach the desired demographic. This involves analyzing user data to identify specific traits and behaviors. Additionally, DSPs can create lookalike audiences, which are groups of users who share similar characteristics with an advertiser's existing customer base, thereby expanding the potential reach of the ads.

While DSPs serve the demand side, SSPs (Supply-Side Platforms) operate on the supply side of the digital advertising ecosystem. SSPs help publishers manage, sell, and optimize their available ad inventory. They make this inventory accessible to DSPs, which then bid on it in real time. The interaction between DSPs and SSPs is fundamental to the programmatic advertising process.

To measure the success of ad campaigns, DSPs track various metrics such as Click-Through Rate (CTR), Conversion Rate, and Fill Rate. CTR measures how often people click on an ad after seeing it, Conversion Rate tracks the percentage of clicks that result in a desired action (e.g., purchase), and Fill Rate indicates the percentage of available ad impressions that are successfully filled with ads. These metrics help advertisers assess and optimize the performance of their campaigns.