Programmatic advertising is booming – and when we say programmatic advertising, we used to talk talk about open exchanges. Because nowadays more and more advertisers are investing in so-called private marketplaces (PMPs).
In this article we will take a closer look not only at them, but although at all the other programmatic advertising types to understand what makes them different from each other and to be able to answer the question why PMP deals are currently probably the hottest thing the online advertising world has to offer.
Different types of programmatic advertising
Very generally, programmatic advertising is the use of technology platforms to automatically buy and sell digital advertising inventory. Simply put, programmatic advertising uses customer data and algorithms to match relevant advertising content with available publisher inventory in real time. But: Notall programmatic advertising is the same. Actually it can be implemented in an umber of ways.
OpenAuction or Real-Time Bidding (RTB)
For a longtime, open auctions were what people meant when they talked about programmatic advertising. As their name already suggests, they are theoretically open to everyone within a marketplace. And while other, more exclusive programmatic advertising options are arising, Open Auctions still remain popular today because they are cost-effective and easily scalable.
But how do they actually work? In a nutshell: Advertisers upload their ad content to a demand-side platform (DSP) and set their highest bids based on cost per thousand (CPM) ads. The DSP then communicates with the publisher's supply-side platform (SSP) and the ad exchange to find a match based on data and bids.
Programmatic Direct is a direct deal between two parties: an advertiser and a publisher. The advertiser approaches the publisher directly to buy ad space. There is no Open Auction. This may sound a little bit like traditional advertising (IO), but it’s not because programmatic direct deals still happen through an advertising platforms of a DSP, a SSP or an ad exchange.
You may be wondering what the benefits of such deals are? Well, Programmatic Direct deals typically offer more transparency and brand safe, as advertisers can review each publishing partner and ad deal individually. But this also comes at a price. Programmatic direct can not only be more expensive but also less scalable than Open Auctions.
Programmatic Guaranteed is a special form of a Programmatic Direct deal. What makes it special is that the publisher and the advertiser agree on a fixed – or guaranteed – CPM for a deal.
This brings both advantages and disadvantages. On the plus side, there is access to premium ad inventory, greater transparency (as fraudulent sellers and unsafe placements can be eliminated) and greater control over ad distribution. The downsides are that such deals are limited in scope and tend to tie up advertisers heavily, making them less flexible.
Programmatic Private Marketplace (PMP)
PMP deals take place in a private marketplace that can be described as an exclusive, invitation-only marketplace. This means that publishers invite only advertisers of their choice to private auctions. The PMP works in exactly the same way as an Open Auction.The only difference is that this auction is only accessible to selected ad buyers.
Therefore PMP deals are more private than Open Auctions but not as private as one-on-one, guaranteed negotiations like Programmatic Direct or Guaranteed deals. It’s somehow something in the middle – or as we like to say: PMPs offer the best of both worlds. Because they combine the automation of open. auctions with the exclusivity of direct transactions.
Why everyone is heading towards PMPs
Combining the best of both worlds is usually a good indicator that a lot of good will happen. This is also the case with PMP. And so advertisers who get access to it can usually always rely on the following four things:
+ More safety -> PMPs prevent ad fraudsters and spoofers from siphoning the ad dollars. All that is left to say here is: Bye bye ad fraud!
+ Premium inventory -> Advertisers are offered the best performing (ad visibility) and carefully sourced inventory at hand.
+ Higher transparency -> Advertisers have a better opportunity to share their first-party data than they do on Open Auctions and are more in control of the inventory.
+ Private environment -> As PMPs are not open to public, but invitation-only advertisers enjoy the pleasure to be prioritized.
To sum it up: At the end of the day PMP deals were created to offer advertisers a safe, premium, transparent and curated private marketplace, while they still have access to a quantitative amount of publishers. So no need to hesitate – let’s go and set up some PMP deals!