Buying media “programmatically” involves an aspect that is unique to its field where we are able to transact media in different ways. Understanding different ways of transacting media, or as we call “programmatic inventory types”, help us to become smarter about how we can maximise value from programmatic buys. Being able to grasp this concept is also critical to help us learn to optimise our supply paths.
How is programmatic media actually sold?
Digital media across channels such as Search and Social (Facebook, Twitter etc.) typically work with auction-based buying where all advertisers participate in a public auction. In contrast, programmatic advertising offers various ways of transacting media, in order to best suit your desired campaign outcomes. This difference can be seen in the auction type or if there is even an auction at all.
There are 4 ways where programmatic media can be transacted. These are also what we call inventory types which are all facilitated through a DSP:
Open Exchange buying refers to a public auction where a given ad slot is available to any advertiser. Interested advertisers compete and bid in a real-time, live auction to serve an ad impression where the highest bidder wins. (Who wins and what is paid as a result of the auction will be covered under a separate topic: Auction Dynamics). The nature of this form of auction is also what is known as Real-Time Bidding (RTB). RTB takes place at the point where the ad slot calls for an auction and the winning ad is served.
To illustrate, they share the same concept in an e-commerce environment, where anyone is able to make an offer on a public listing. The seller of the listing would naturally sell to the highest bidder.
Private Marketplace (PMP)
In a PMP, advertisers take part in a private, invite-only auction where only a limited number of advertisers will be allowed to compete. With PMPs, publishers are able to regularly set aside premium inventory reserved for selected advertisers. This gives publishers the opportunity to increase their rates to help advertisers increase their chances of having their ads shown.
This is akin to a private charity gala where only selected participants can bid for antiquities, and not everyone will have the opportunity to purchase these auction items.
Preferred Deals are reserved for selected advertisers at a pre-arranged price. However, when transacting through a Preferred Deal, advertisers need not compete with others for inventory as it is bought at a fixed price. This allows advertisers to secure premium ad slots without the concern of price fluctuations.
Programmatic Guaranteed deals are also commonly known as programmatic direct deals. This transaction type is akin to the traditional media buying approach: negotiation is handled solely by the advertiser and publisher. This is seen to be of the highest priority in programmatic buying. This one-to-one transaction method is similar to Preferred Deals, but Programmatic Guaranteed provides the added commitment between the publisher and advertiser. Unlike the latter, Preferred Deals are not obligated to deliver a fixed amount of impressions or budget.
Note: While typical deal type comparisons articles will also discuss the priority of each deal type to the publishers (traditionally known as the waterfall), the rise of header bidding has changed this structure. While private deals (PMP, PD, PG) may have preferential inventory or allow you access to certain format types (homepage takeovers, skinning etc.), this does not necessarily mean that a bid from a private deal will automatically beat Open Exchange bids or those of a “lower” priority.
How is knowing about programmatic inventory types or, specifically, private deals useful?
1. Automation = Less work!
By serving ads via private deals, publishers are able to connect directly to advertisers and automate sales of their digital ad space which is maintained and facilitated by the DSP.
2. Quality Control
In the programmatic space, open exchange delivery is difficult for publishers to clearly understand who is serving ads on your sites with billions of bid requests and millions of impressions per day. Private deals also help publishers to curate the list of advertisers that fill their placements.
3. Money $$$
The advertising business is all about the money. Through private deals, publishers can ensure that advertisers are paying top dollar for their prized placements by fixing floor price or fixed prices for their deals. This essentially allows them to maximise their revenue (or yield) of each impression (given a consistent, and predictable volume of traffic).
4. First-Party Data Usage
With industry changes to cookies and tracking, publishers now hold power in exclusively knowing their users on their sites & apps. Increasing limitation of data sources outside of walled garden platforms leaves a world where publishers are in control of how to monetise and grow revenue from their users. These are real and verified audiences that advertisers would love to reach out to.
Forget about traditional sales. Through DSPs, advertisers can now connect directly to ad spaces and publishers without any intermediaries. Speed is essential.
2. Transparency & Clarity
Being able to determine where your ads end up is critical in a digital age of intense brand scrutiny. Advertisers are able to gain clarity and insights from the knowledge of their media placements which can be reported through programmatic buying to maximise campaign performance and achieve their goals.
Across all types of programmatic delivery, there is always the risk of fraud. Particularly in the authenticity of the sites that they are reportedly serving on (e.g. domain spoofing). Fundamentally, as advertisers, it has to be acknowledged that it is impossible to be “fraud-free”. Technology at large, outside of advertising, is always susceptible to the threat of “zero-day” exploits. The use of ad verification tools is also useful in mitigating this problem, but doesn’t fully solve the problem. To prevent wastage of media dollars to undeserving parties, it is critical for advertisers and publishers alike to understand how to maximise the use of each inventory type and push for increasing usage of private deals that foster more direct partnerships between the two ends of the media spectrum.
Icons – Data Flow by SBTS from the Noun Project
Feature Image – Banner vector created by sentavio via Freepik