The world of programmatic advertising is booming. According to eMarketer, companies are expected to spend $123.22 billion on programmatic advertising by the end of 2022.
In years past, the majority of this money would have been funneled into open exchanges. But now, more advertisers are investing in exclusive, invitation-only marketplaces aptly known as private marketplaces (PMPs).
In this article, we take a closer look at PMP advertising and offer insight into why this shift is occurring and what it may mean for your business.
Jump Ahead
- What is a private marketplace?
- How do PMP deals work?
- Why is private marketplace spending increasing?
- How do publishers benefit from private marketplace advertising?
- How do advertisers benefit from private marketplace advertising?
What Is a Private Marketplace?
A PMP deal is a type of real-time bidding (RBT) auction in which a publisher sells premium inventory to a limited group of buyers.
Compared to open exchanges, private marketplace advertising offers a range of benefits to publishers. We discuss this in more detail below. But for now, know that PMP deals give publishers more control over their ad inventory.
By limiting the auction to certain advertisers—as opposed to a crowd—publishers can better manage the type of content that appears on their platform. The New York Times, for example, likely prefers to partner with very different companies than The Joe Rogan Experience. PMP advertising allows each publisher to select advertisers that match their respective ethos.
How Do PMP Deals Work?
In open exchanges, any advertiser can bid on inventory. However, in a private marketplace, a deal ID is needed to make a bid.
A deal ID is a system-generated string of characters (for example, 3961278807007882311) that is assigned to an inventory package. Using the deal ID, an inventory package can be purchased through demand-side platforms.
A demand-side platform is a programmatic advertising platform that allows advertisers to bid on premium inventory from publishers. This helps buyers purchase ad space more efficiently.
Why Is Private Marketplace Spending Increasing?
In recent years, spending in private marketplaces has consistently outpaced spending in open exchanges. Why?
The answer is simple: ad fraud, or the attempt to fraudulently represent online impressions, clicks, and conversions.
Due to the non-discriminatory nature of open exchanges, these auctions are very vulnerable to botnet traffic and, therefore, ad fraud. In a March 2019 report, analysts found that 18% of open exchange inventory was ad fraud. A year of this malicious activity cost advertisers $1.4 billion.
PMPs are generally considered a safer alternative to open exchange bidding. Since publishers screen advertisers, it is more difficult for invalid traffic to creep into the gated auction. Because of this, more and more companies are eschewing open exchanges for PMP advertising.
How Do Publishers Benefit From Private Marketplace Advertising?
For publishers, the main advantage of PMP deals is control. Rather than open the auction to all advertisers, publishers can curate a list of select buyers. In doing so, publishers can protect their reputation while demanding a higher price.
Other benefits include:
Higher CPMs
Advertisers are willing to pay a higher CPM (cost per mile) for PMP deals. Why? Because there is a huge demand for premium inventory on exclusive and reputable publishing platforms. Advertisers also want to avoid awkward or improper ad placement—something that is possible with PMPs.
Programmatic Efficiency
Since PMP deals are automated through demand-side platforms and supply-side platforms, publishers avoid the legwork associated with direct sales. Ergo, there is the potential for PMP deals to replace in-house sales teams.
Improved Brand Management
Private marketplaces allow publishers to control the type of advertising content that appears on their sites. Again, returning to the example provided above, PMPs allow The New York Times and The Blaze—two very different publishers—to select advertisers that are congruent with their values.
How Do Advertisers Benefit From Private Marketplace Advertising?
With private marketplace advertising, buyers are afforded more control over where their ads live. This allows companies to better manage their brand reputation and, in doing so, increase annual revenue.
Other benefits include:
First-Party Data
In many cases, PMP deals allow advertisers to directly access information about their audience, traffic volumes, engagement rates, and more. Using this data, companies can refine their messaging.
Higher ROI
Since PMPs use automated technology, advertisers can purchase premium inventory while spending less time negotiating and communicating with publishers. Ultimately, this increases ROI.
Reduced Ad Fraud
Open exchanges are notorious for ad fraud. As previously mentioned, advertisers lost an estimated $1.4 billion in 2019 on account of botnet traffic. Since private marketplaces are less vulnerable to fraudulent activity, companies can rest easy knowing that their marketing dollars are well-spent.
Brand Safety
When advertisers purchase inventory in an open exchange, they cannot be sure whom they are buying ad space from. As such, there is no way of knowing if the publisher’s reputation will be positive or negative. Luckily, PMP advertising takes the guesswork out of the equation.
Align Your Business for Unprecedented Growth
As the sphere of programmatic advertising continues to explode, publishers can outpace the crowd by transitioning from open exchanges to PMP advertising. They can also use Admiral.
A Visitor Relationship Management (VRM) platform, Admiral helps publishers build deeper relationships with visitors by growing newsletter sign-ups and paid subscriptions, unlocking adblocked revenue, growing social media followers, and more.
To see how VRM can help align your business for unprecedented growth, schedule a demo today.
