Blog

October 14, 2015

The Benefits of Private Marketplaces for Programmatic Trading

Miki Rapoport, Director Product, and Eric Salsa, Business Operations

Programmatic dominance in the digital space is increasing. Next year it is expected to account for almost 60% of UK display advertising and as growth continues, programmatic models are diversifying beyond traditional open exchanges.

Private Marketplaces (PMPs) in particular have developed significantly and are fast-becoming a viable programmatic mechanism. According to a recent eMarketer report, PMPs will account for 42% of total programmatic ad spend in 2015, predicted to reach 47% by 2016.

PMPs enable sellers to choose select buyers that will have preferred inventory access and/or insights, creating a middle ground between direct sales and open exchanges. While open exchanges are still an effective model for direct response campaigns looking to achieve maximum scale with minimal spend, PMPs offer advertisers potentially greater contextual relevance and targeted inventory.

The benefits of PMPs

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Better deals for publishers

PMPs enable publishers to achieve higher CPMs for their premium inventory, as they typically enjoy higher minimum floor prices than the open auction. They also provide publishers with the means to broaden their offering, such as the ability to utilise first party data to enrich their inventory segmentations. Negotiations with buyers may be more time consuming than with open exchanges, but they also create direct relationships, which can lead to further opportunities.

Superior access for advertisers

Not only do PMPs facilitate closer publisher interactions, they also give buyers greater access to premium inventory, enabling them to buy before their competitors.

Buyers may also gain access to inventory previously blocked in an open exchange, or exclusive seasonal or data-enhanced inventory. PMP CPMs are usually higher then those of open exchanges, but the higher price means better inventory access to insights — all combined with the fundamental scale and efficiency of programmatic.

How to make the most of PMPs

To make PMPs work effectively, communication and transparency is crucial. Both publishers and advertisers must take a considered approach to improve mutual performance:

What should publishers do?

Publishers need to ensure campaigns are optimised for success by obtaining a complete view of buyer objectives and expectations. Details such as KPIs, high-level bid-rates, spend predictions, preferred formats, ad units, and devices provide publishers with an accurate understanding of how they can help support the advertiser’s campaign needs. With in-depth insights, publishers can supply the most appropriate inventory to buyers, ensure creative meets brand safety guidelines, and highlight potential barriers, such as brands included on block lists.

What should advertisers do?

All PMPs are different, which means advertisers need to be clear on the specifics. They must gain a thorough understanding of what the marketplace offers, where ads will appear, and the quality of each domain. It is important to ask questions such as: does the advertiser have the first look, and if not, where do they compete within the stack? Is inventory available at a fixed-price (preferred deal) or second-price auction (invitation-only auction)? And what is included? Only by exploring every aspect of each marketplace can advertisers construct successful campaigns.

Conclusion

PMPs are a smart buying model providing advertisers with quality inventory and targeted audiences at scale, while allowing publishers to achieve higher CPMs through direct relationships. For this evolving model to continue to grow buyers and sellers must communicate their expectations and operate transparently to be sure they are working to achieve the same goals.

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