A DSP or Demand Side Platform is the technology that allows advertisers to utilise an ad exchange and the impressions supplied by publishers. With the ability to use various 3rd party data sources, from contextual and demographic data to behavioural and interest data, advertisers are able to target audiences though a granular and performance driven solution.
An ad exchange without a DSP is like going on 1,000 blind dates without knowing any information about the audience. Include a DSP and enter the equivalent of an online dating agency; although the platform doesn’t know exactly which impression (man/woman) will deliver results (a second date) it will give you as much information as possible to help make an educated decision.
If you are still asking ‘what is a DSP’ then perhaps it would be helpful to see where it fits within the ad exchange ecosystem:
A DSP acts as a link between the agency or advertiser and the publishers or networks. With lower cost impressions due to the lack of large publishers charging premium rates, remnant inventory is pushed into the exchange and DSPs by networks and Supply Side Platforms (SSPs).