By Phil Parrish on April 17th, 2018
With investment in programmatic media set to eclipse $47 billion in 2018, programmatic advertising is no longer a niche component of digital marketing. Four out of five digital display ads are now served through programmatic ad tech. Many analysts forecast that programmatic investment could reach $70 billion by 2020.
Though programmatic continues to grow, marketers investing in this media channel are still concerned about transparency and fraud in the ad buying process. Because of this, more marketers are turning their backs on open-exchange real-time bidding (RTB) inventory and allocating more of their dollars to private setups, such as private marketplaces, programmatic direct transactions, and programmatic guaranteed deals.
As you can see from the above chart, eMarketer forecasts that private marketplace ad buying will surpass open exchange buying by 2020. Other analysts have forecasted that private setups may pass the open RTB market by the end of 2018. Either way you slice it, there is certainly a shift in the programmatic industry as investment is moving from open-auctions to private setups that offer more control, transparency, and access to premium inventory.
See also: Digital Audio Advertising 101: The Current State of Digital Audio & Limitations Impacting Faster Growth
Though the emphasis on advertising quality and brand safety continues to grow, many advertisers do not have direct access to private marketplace platforms and aren’t receiving the transparency and support they need to properly manage the myriad of ways to transact private buys. This is another reason why we are bullish on the projected growth in private marketplace buying – there are still a lot of enterprise and mid-market brands that do not have a strategic plan for private marketplace programmatic buying.
In this article, we are going to define all the terms related to private setups vs. open-exchange ad buying. So, let’s dig in!
Programmatic Private Marketplace Definitions
There is no shortage of buzzwords that marketers and ad tech firms seem to use interchangeably when talking about private vs. open-exchange buying. However, there are nuances between the following key terms:
- Private Marketplace: An invitation-only RTB auction where one publisher invites a select number of buyers to bid on its inventory before the ad inventory is auctioned off to the open advertising exchanges.
The inventory that’s purchased is transparent because the buyer knows exactly which site (and sometimes the exact web page) that the ad will run on. With private marketplaces, the general premise is to skip the exchanges altogether.
Most commonly, DSPs plug directly into a premium publisher’s inventory source (think ESPN.com, Forbes, NY Times, etc.). A “floor price” (minimum CPM bid) is set by the publisher, and the group of advertisers in the private auction can then bid on the inventory in an RTB environment.
The key benefit of private marketplaces is that an advertiser can gain direct access to a premium site and ingest their 1st/3rd party data on the buy while competing for ad space against a smaller pool of bidders. Private marketplaces are typically accessible in Private Marketplace Platforms (PMPs) that are offered by mainstream DSPs.
- Open-exchange: Ad inventory sold through an open exchange allows all buyers of programmatic media the opportunity to purchase the same ad impressions through an open auction. Impressions available in an open-exchange are purchased through RTB.
In most open-exchange RTB environments, the advertiser purchases impressions blindly, where they only know the category of sites that ads may appear on, but not necessarily the exact sites. Ad exchanges store numerous sites and provide an abundance of inventory at discounted rates.
The ad exchange model follows the same process as a real stock exchange. Publishers make their inventory available at lower rates, and marketers (the traders) bid on the available ad space and whoever bids higher wins the impression.
It’s important to note that private marketplace inventory is also purchased via RTB, but this occurs before the inventory is auctioned off to the open ad exchanges.
- Programmatic Direct: This integration allows an advertiser to buy guaranteed ad impressions in advance from a specific publisher while executing the buy through programmatic technology. Programmatic Direct is directly sold, guaranteed inventory that requires little to no human involvement in the sales process.
The advertiser may work with a sales rep to negotiate a specific placement (e.g. placement on a specific web page, home page takeover, etc.) and the parties will agree to a fixed CPM rate and guaranteed impressions.
From there, the advertiser can execute the buy in their DSP of choice after receiving a ‘Deal ID’ from the publisher. The advertiser can then layer 1 st /3 rd party data on the buy for more advanced audience targeting. Also referred to as Automated Guaranteed, Programmatic Direct is a good choice for marketers who are focusing on brand safety, inventory control, and premium placements.
- Programmatic Guaranteed: A more advanced approach compared to Programmatic Direct, Programmatic Guaranteed enables an advertiser to device ID or cookie match an audience with a specific publisher and pre-agree on a fixed rate CPM for ad inventory.
Essentially, Programmatic Guaranteed allows an advertiser to align its data-management platform (DMP) with a publisher’s DMP to match the right target audience on the publisher’s site. This method helps marketers engage with very specific audiences on a publisher’s website at a much larger scale through programmatic technology.
- Deal ID: A Deal ID is a deal identifier or unique number assigned to a programmatic ad buy. It helps advertisers and publishers agree to specific criteria of an ad buy before it is executed in a private marketplace platform (PMP).
Deal IDs can include the minimum price the advertiser is allowed to bid, types of ad units, section of the site, etc. Deal IDs are executed through a private marketplace which gives the advertiser access to the publisher’s inventory in an invite-only environment, and the Deal ID provides added functionality that makes it easier to set up the rules for the deal. You can think of Deal IDs as the automated version of the digital insertion order.
Final Thoughts on Programmatic Private Marketplaces
To summarize, marketers who want access to the most available inventory at the most efficient price would start with open-exchange RTB buying. If an advertiser wants access to premium publisher inventory in a less competitive pool, it’s in the best interest of the advertiser to transact the buy in an RTB private marketplace.
We encourage marketing teams to analyze the performance of campaigns using a domain or site list report. The data in this report can help you understand which sites perform best. From there, you can leverage this knowledge by researching if the top performing sites are available in a PMP environment. If the sites are available in a private marketplace, you can increase your SOV (share-of-voice) on the properties by increasing your bid above the pre-negotiated floor price, and by taking advantage of a less competitive market for the premium ad inventory.
See also: The Key to an Effective B2B Programmatic ABM Advertising Strategy
Once a marketing team has tested ‘pre-stocked’ inventory deals in a PMP and has become comfortable with the technology, it may be a good time to test a more advanced private setup. If an advertiser wants even more control over the buying process, the advertiser can negotiate a Programmatic Direct setup with a publisher, or a Programmatic Guaranteed buy via a Deal ID.
If you’re ready to add private marketplace buys to your programmatic campaigns, or if you feel like there’s room for improvement with your current CTV campaigns, please contact us to learn more and see how our team of experts can help.
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