A Demand Side Platform (short: DSP) is a software that digital advertisers use to purchase advertising inventory fully automatic.
DSPs enable advertisers to buy impressions from a wide range of publishers and to exactly address their target audience throughout tracking technology. Publishers offer their advertising inventory in digital marketplaces (so-called Ad Exchanges) and the DSP automatically chooses which inventory is the most suitable for each advertiser. The price for the advertising inventory is determined by demand and supply in the Real-Time-Bidding (short: RTB) process.
This is very beneficial since there is no need to negotiate prices individually anymore and the advertising inventory is automatically auctioned off to the highest bidder. This whole process is taking place in milliseconds, while a user is loading a mobile webpage or application.
Although they are quite similar in how they work, DSPs should not be mixed up with Ad Networks. DSPs include a lot of functions that Ad Networks offer, including access to a wide range of advertising inventory and advanced targeting capabilities. But additionally, DSPs offer access to different Ad Networks and the possibility to buy, serve and track ads with one central tool.