What do DSPs primarily optimize for in their bidding strategy?

Demand-Side Platforms (DSPs) primarily aim to optimize for low Cost Per Mille (CPM) as part of their bidding strategy. This focus is essential because the lower the CPM, the more efficiently the advertising budget can be utilized to reach a larger audience or the desired target segment. A lower CPM allows advertisers to purchase more ad impressions and potentially improve their performance metrics, such as return on investment (ROI) or conversion rates.

When DSPs optimize for low CPMs, they analyze various factors, including bids from competitors, inventory availability, and audience targeting options. By securing ad placements at the lowest possible prices, campaigns can be more scalable, enabling advertisers to achieve their objectives at a cost-effective rate. This strategy ultimately supports the overarching goal of maximizing the effectiveness of ad spend.

Maximizing user engagement and increasing the number of advertisers may be beneficial in various contexts but are not the primary focus of DSPs in their bidding strategy. Similarly, reducing advertisement length is not a central concern, as the effectiveness of an ad is determined by more than just its length. Hence, the emphasis on achieving low CPMs aligns with the fundamental operational objectives of DSPs in the programmatic advertising ecosystem.