The 5-Step Process to Reduce Advertising Costs on DSP

Reading time: 6 minutes

It goes without saying that today’s digital advertising market is an incredibly competitive one. Small businesses seldom stand out and usually have to raise their price per click (PPC) to compete with bigger businesses or they end up falling behind — which they often do as well. 

What’s more is that it often takes a bigger budget to enter new markets and compete with everyone else to get more engagement and conversions. At least, that’s what most businesses believe.

For example, if you’re using a demand-side platform for your ad campaigns, there are certain features that can be customized to help reduce your overall advertising costs. These customizable features are often overlooked, but they enable advertisers to reduce the number of unsuccessful factors in an ad campaign[11] so they can better optimize for the next.

Therefore, the key isn’t necessarily having a bigger budget but optimizing your ad campaigns by reducing your advertising costs via demand-side platforms. In this article, we’re going to walk you through a five-step process to reduce your advertising costs on demand-side platforms.

Here’s the rundown:

1. Choose the Best Creative Type

Creatives can be a bit tricky as it’s not necessarily the size of the creatives that impact an ad’s efficiency. This is because different creative sizes work well for different goals and platforms. Additionally, you have the larger ad units that would seem more memorable while smaller ad units can have a farther reach since they fit into more ad slots. It’s also easier to integrate smaller ad units across various web pages, apps, and browsers. 

However, the actual cost of ad placement doesn’t depend on the ad unit[12]’s size but rather the traffic, geo targeting[13], and any other selective targeting options. Therefore, the more detailed the targeting, the higher the cost. The same goes for video creatives. The larger the video, the more it’s going to cost to display.

Essentially it all comes down to choosing creatives that meet your specific goes. So, if you’re looking to reach a broader audience and create more brand recognition, your best bet would be to select smaller and more static digital ad formats. You could also use native ad formats, banners, and videos to get the job done.

If you’re looking to increase conversions, push ads are a good go-to option as they work on all platforms and devices and aren’t banned by ad blockers. Lastly, if your goal is to increase engagement, using interactive ads is the way to go.

2. Don’t Stop Testing, Ever

When you’re starting a new programmatic advertising[1] campaign, it’s pretty easy to configure and manage. However, the initial setting options can be rather broad as they cover everything from audience segmentation to daily budget spend to creative[14] type and beyond.

Therefore, you need to use split or A/B testing frequently to compare your configurations to determine which works best for your specific goals. It doesn’t matter what it is either — if it can be configured, it can be tested.

The general rules for testing are as follows:

  • Always test multiple ads per user segment[15]
  • Each segment should not cover more than 20,000 people
  • Testing should be run at the recommended bid to reveal the audience quality
  • Always set the frequency[16] cap per user. These caps vary from one to three impressions per person viewing larger creatives and up to 100 impressions per person for smaller creatives

These tests will enable you to single out the creatives that perform best per each audience segment in regards to click-through rate (CTR[2]), conversion rates, and more. Once you find the creatives that perform best, you can upload them to your demand-side platform[3].

3. Choose a Suitable Bidding Strategy

There are a number of different pricing models out there, and each comes with its own advantages and disadvantages. The most popular pricing model is the cost per mille or thousand impressions (CPM[4]), cost per click[9] (CPC), and the cost per install[5] (CPI). The key is to choose the one pricing model that’ll suit your needs best to ensure an overall cost reduction.

It’s generally well-known that the CPM model is the most affordable pricing model to use since you’re only paying for every 1,000 impressions served versus the number of clicks or installs carried out by users. The trick is to ensure that your impressions generate clicks once they’re served, which means the CPM model is the most effective cost-saving solution as long as your creatives stand out and drive engagement.

As for the advantages of the CPC model, you get more high-quality traffic made up of users who are already interested in what you’re selling and will typically click on the ads. The CPI model is best for mobile campaigns as it focuses on in-app advertising[6].

Once again, it all comes down to your specific goals and the type of ad campaign you plan to run.

4. Use Extended Targeting

Since targeting is always a key factor in ad campaigns, it’s important to understand that it’s best to build a custom audience by dividing everyone up into audience segments manually. For example, you can categorize them by age group, country, language, device type, OS type, and so on. You can also integrate a data management platform[7] (DMP) to aggregate user data[17] from multiple channels and create unique segments for you.

The point? Your demand-side platform can already target the right audiences for you once you’ve set the appropriate filters to turn basic targeting into extended targeting. Using a DMP in addition to your DSP will allow for more accurate targeting as well since it accumulates first, second, and third-party data[8] from various channels. 

The takeaway? Configure your demand-side platform for extended targeting as much as possible, and use a DMP for more accurate audience targeting if possible. Keep in mind, however, you want to avoid narrowing down your potential audience too much. It’s great to be as specific as possible, but if you’re trying to increase brand awareness, broadening your audience a little bit more will help you attract a greater number of users.

It’s actually recommended to set up each advertising campaign with a few (two to three) specific targeting options. Not only will this make your campaign more efficient, it’ll also help you understand which targeting options brought the most engagement or conversions.

5. Configure Your Additional Options

There are several additional options you’ll want to play around with to see what works best for your advertising goals and will reduce your overall ad spend. 

These are the additional options we’re talking about:

  • Dayparting: This option essentially schedules your ads to appear on screens during the times when users are most responsive to your specific brand. By applying this option on the programmatic platform you can aim for certain blocks of time rather than limiting your schedule to one hour out of the day.
  • Setting up a daily campaign budget: You have the option to configure a daily budget spend lower than the funds shown in your account. This helps to prevent spending your whole advertising budget in one day. The minimum campaign spend setting is usually around $100 per day, and you can also set up maximum impressions shown before the bid stops (these should reach at least 130,000 impressions). 
  • Impression[10] frequency: You can also control the frequency with which ad impressions are served per specific user. For example, you can limit the amount of times the same user will see a certain ad to ‘3’, which means they’ll only be served the ad three times a day. This configuration option not only prevents overspending but also prevents banner blindness in users.
  • Whitelist and blacklist[18] filtering: Whitelist filtering applies to website domains — specifically the ones that you’ve recognized as large income drivers in your previous campaigns. You can apply the whitelist filter to specifically target these domains for the best possible outcomes. Adversely, you can apply the blacklist filter option to prevent your ad campaigns from serving impressions on the least effective domains.  

Wrapping it Up

Essentially, each step in the cost-reduction process on demand-side platforms really depends on your specific advertising goals. The more specific you can get, the more you can save on your next campaign. Once you’ve been around the ad campaign block several times, it becomes easier to recognize your audience and the best ways to target them without wasting your budget — which eventually leads to your budget becoming your most competitive advantage.

Why?

Because when you optimize properly and ensure that every dollar is spent effectively, it not only maximizes engagement and memorability but enables you to invest in the next campaign with ease.

Of course, the demand-side platform technology being used also plays a crucial role in your ad spend and functionality. So, make sure to choose a DSP that gives you the most control in regard to configurations and features for your next ad campaign.

Terms
1. programmatic advertising. Programmatic advertising entails using machine learning and technology suites to buy and sell ad inventory with a data-driven process.
2. Click-Through-Rate [CTR] ( CTR ) CTR relates to how many times users clicked on an ad divided by the number of times that ad was displayed to users.
3. demand-side platform. A Demand Side Platform or DSP is a platform where advertisers can buy digital inventory to easily and more directly connect with sellers in a programmatic and real-time ecosystem.
4. Cost Per Mille/Thousand [CPM] ( CPM ) Cost per mille, or thousand (mille = thousand in Latin). A pricing model in which advertisers pay for every 1000 impressions of their advertisement served. This is the standard basic pricing model for online advertising. See also CPC and CPA.
5. cost per install. Cost per install. A payment model in which mobile advertisers pay each time a user installs their app.

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