A preferred deal, also referred to as programmatic non-guaranteed, involves an agreement between a publisher (seller) and an advertiser (buyer) granting the advertiser preferential access to inventory. In this arrangement, the advertiser receives early access to inventory in exchange for a fixed, pre-negotiated cost per thousand impressions (CPM). This arrangement ensures that the advertiser receives priority access to desired inventory while providing the publisher with a guaranteed revenue stream.

What are preferred deals?

Preferred deals, a type of programmatic direct advertising, facilitate direct connections between publishers and advertisers. In this arrangement, an agreement is established where the publisher agrees to offer advertisers preferential access to their inventory at a pre-negotiated cost per thousand impressions (CPM).

Unlike private marketplace or open auction setups, the inventory in preferred deals is not reserved for a specific advertiser. Instead, buyers are given the first opportunity to review the inventory and make a decision on whether to purchase it.

If a buyer declines the deal, the publisher has the option to sell their inventory in a private marketplace or open auction. Furthermore, publishers can negotiate preferred deals with multiple advertisers.

It is important to note that the specifics of preferred deals, such as impressions and dates, are not fixed and can be subject to adjustment. This flexibility is why preferred deals are also referred to as programmatic non-guaranteed.

How do preferred deals work?

Preferred deals operate in two ways, depending on whether the publisher or the advertiser initiates the process:

If a publisher initiates a preferred deal:

1. The publisher sends invitations to potential advertisers, often utilizing platforms like Google Ad Manager.
2. Interested advertisers accept the invitation and establish communication with the publisher.
3. Both parties engage in negotiations to determine terms, including the number of impressions and the cost per thousand impressions (CPM).
4. The publisher creates a proposal outlining the agreed-upon terms and shares it with the advertiser.
5. Once both parties finalize the deal, the campaign begins, and the agreed-upon inventory is allocated.

If an advertiser initiates a preferred deal:

1. The advertiser identifies a suitable website or app that aligns with their requirements.
2. The advertiser reaches out to the publisher expressing interest in a preferred deal.
3. The publisher responds with more information and engages in CPM negotiations.
4. Upon reaching an agreement, the advertiser places an order for the desired inventory.
5. The publisher reviews the order, confirms it, and initiates the campaign accordingly.

Top benefits of preferred deals for publishers

Preferred deals enable a direct partnership between publishers and advertisers, allowing for more tailored and mutually beneficial advertising arrangements.

Preferred deals offer several significant benefits to publishers, enhancing their revenue and providing greater control and flexibility in their advertising strategies. Here are the top advantages:

1. Predictable revenue: Preferred deals eliminate the uncertainty of auctioning inventory and fluctuating prices. With a fixed cost per thousand impressions (CPM), publishers can enjoy a more stable and predictable revenue stream. This allows for better financial planning and management.
2. Premium pricing: By offering preferential access to inventory, publishers can set a fixed CPM that is often higher than what would be achieved in an open auction. Advertisers are willing to pay a premium price for the opportunity to secure priority access to desired inventory, enabling publishers to maximize their revenue potential.
3. Increased flexibility: Publishers are not limited to a specific set of advertisers in preferred deals. If an advertiser declines the deal, publishers have the freedom to sell their inventory in the open market or explore other opportunities. This flexibility empowers publishers to optimize their revenue and ad quality without solely relying on specific advertisers.
4. Quality control: Preferred deals allow advertisers to ensure brand safety and deliver their campaigns in a trusted and brand-friendly environment. Publishers and advertisers agree on specific ad placements before finalizing the deal, enabling better control over the quality and context of the advertising. This fosters improved ad performance and enhances the overall user experience.

Furthermore, advertisers have the option to decline an inventory if it doesn’t meet their specific needs, providing a level of flexibility and quality assurance for both parties involved.

Disadvantages of preferred deals

While preferred deals offer significant advantages, there are a few drawbacks that both publishers and advertisers should consider:

Disadvantages of preferred deals for publishers

1. Unfulfilled inventory risk: The main disadvantage is that publishers face the possibility of unfulfilled inventory if an advertiser chooses not to buy it. In such cases, the inventory may move to a private auction and, eventually, the open market. This can impact the publisher’s revenue potential.
2. Challenges for newer or smaller publishers: Preferred deals may not be as accessible for newer or smaller publishers who may struggle to attract advertisers’ attention. Established publishers with a strong reputation and larger audience bases often have a higher chance of successful preferred deals.
3. Limited reach: Preferred deals typically involve a one-on-one agreement with a specific advertiser, which may limit the reach and variety of advertisers accessing the publisher’s inventory. Publishers may miss out on opportunities to work with other advertisers who could potentially bring different targeting options or niche markets.
4. Resource intensive: Managing preferred deals requires time and resources to negotiate and maintain agreements with individual advertisers. Publishers need to dedicate efforts to communicate, negotiate terms, and ensure the smooth execution of each preferred deal. This can be challenging for publishers with limited resources or smaller teams.
5. Dependency on advertiser demand: Publishers relying heavily on preferred deals may face challenges if the demand from advertisers decreases. They might become more dependent on a limited number of advertisers, potentially leading to fluctuations in revenue and the need to explore alternative revenue streams.

Disadvantages of preferred deals for advertisers

1. Competition for specific inventory: Preferred deals do not guarantee exclusivity, so advertisers may find themselves competing with other buyers for the same inventory. This can drive up the CPM and increase competition for the desired ad placements.
2. Lack of benchmark pricing: Unlike open auctions, preferred deals do not provide advertisers with a benchmark for pricing. Advertisers must assess the credibility and trustworthiness of the publisher before negotiating the price, which requires careful evaluation.
3. Complex publisher selection process: Advertisers need to identify the right publishers whose audience aligns with their target demographic. This process can be more complex and time-consuming, requiring thorough research and analysis to ensure the best match.

Understanding these disadvantages allows publishers and advertisers to make informed decisions and develop strategies that effectively balance the benefits and drawbacks of preferred deals.

Preferred deals vs. private auctions

While preferred deals and private auctions share similarities in terms of publishers inviting advertisers to purchase their inventory, there is a crucial distinction between the two methods:

• Private auctions: In a private auction, publishers selectively invite a limited number of advertisers to bid for their inventory. The publisher sets a floor price and has full control over the participants in the auction. Advertisers submit their real-time bids, and the highest bid ultimately wins the auction. Private auctions are also referred to as private marketplaces or invitation-only auctions.
• Preferred deals: In contrast to private auctions, preferred deals do not involve real-time bidding. Instead, advertisers agree to pay a fixed, pre-negotiated cost per thousand impressions (CPM) to secure inventory. Preferred deals do not provide early-bird access to inventory, and advertisers are given lower priority in ad servers compared to private auctions.

The distinction lies in the bidding process and pricing structure. Private auctions rely on real-time bidding, where advertisers compete with their bids, while preferred deals establish fixed CPMs without real-time bidding. Additionally, private auctions offer higher priority in ad servers and provide advertisers with early access to inventory, whereas preferred deals do not offer these advantages.

Understanding the difference between preferred deals and private auctions helps advertisers and publishers choose the most suitable approach based on their specific needs and objectives.

Preferred deals vs. private auctions

While preferred deals and private auctions share similarities in terms of publishers inviting advertisers to purchase their inventory, there is a crucial distinction between the two methods:

• Private auctions: In a private auction, publishers selectively invite a limited number of advertisers to bid for their inventory. The publisher sets a floor price and has full control over the participants in the auction. Advertisers submit their real-time bids, and the highest bid ultimately wins the auction. Private auctions are also referred to as private marketplaces or invitation-only auctions.
• Preferred deals: In contrast to private auctions, preferred deals do not involve real-time bidding. Instead, advertisers agree to pay a fixed, pre-negotiated cost per thousand impressions (CPM) to secure inventory. Preferred deals do not provide early-bird access to inventory, and advertisers are given lower priority in ad servers compared to private auctions.

The distinction lies in the bidding process and pricing structure. Private auctions rely on real-time bidding, where advertisers compete with their bids, while preferred deals establish fixed CPMs without real-time bidding. Additionally, private auctions offer higher priority in ad servers and provide advertisers with early access to inventory, whereas preferred deals do not offer these advantages.

Understanding the difference between preferred deals and private auctions helps advertisers and publishers choose the most suitable approach based on their specific needs and objectives.

Considering preferred deals?

Before committing to preferred deals and purchasing ad inventory, it’s crucial for advertisers to carefully assess the pros and cons.

Preferred deals are particularly advantageous when you aim to target a specific audience segment without being tied down to a long-term commitment. They offer flexibility and are beneficial when you have a clear understanding of your target demographic and have identified publishers that align with your goals.

However, it’s essential to thoroughly vet the publisher and analyze their current traffic patterns before entering into a deal. Evaluating the publisher’s reputation, audience quality, and suitability for your brand ensures a mutually beneficial partnership.

By weighing the advantages and considering the publisher’s credibility, you can make an informed decision and maximize the effectiveness of your advertising efforts.

KEY INFORMATION ABOUT PREFERED DEALS TO REMEMBER

Considering Preferred Deals?

• A preferred deal is a direct agreement between a publisher and an advertiser, providing preferential access to inventory at a pre-negotiated cost per thousand impressions (CPM). It’s important to understand the benefits and drawbacks of preferred deals for both publishers and advertisers.
• Benefits for publishers:
  • Revenue Predictability: Preferred deals offer a more predictable revenue stream compared to other advertising methods.
  • Quality Control: Publishers can maintain brand safety and ensure high-quality traffic by curating the advertisers and placements within the preferred deal.
  • Higher Earning Potential: Preferred deals often result in higher CPMs, allowing publishers to maximize their earning potential.
• Drawbacks for publishers:
  • Unfulfilled inventory risk: One drawback is the possibility of unfulfilled inventory. If an advertiser does not purchase the available inventory within the preferred deal, the publisher may need to find alternative ways to sell the unsold inventory, such as private auctions or the open market. This can impact the publisher’s revenue potential and require additional effort to monetize unsold inventory.
  • Limited reach: Preferred deals typically involve a one-on-one agreement with a specific advertiser, which may limit the reach and variety of advertisers accessing the publisher’s inventory. Publishers may miss out on opportunities to work with other advertisers who could potentially bring different targeting options or niche markets.
  • Resource intensive: Managing preferred deals requires time and resources to negotiate and maintain agreements with individual advertisers. Publishers need to dedicate efforts to communicate, negotiate terms, and ensure the smooth execution of each preferred deal. This can be challenging for publishers with limited resources or smaller teams.
  • Dependency on advertiser demand: Publishers relying heavily on preferred deals may face challenges if the demand from advertisers decreases. They might become more dependent on a limited number of advertisers, potentially leading to fluctuations in revenue and the need to explore alternative revenue streams.
• Benefits for advertisers:
  • Brand Safety and Quality Traffic: Preferred deals provide better control over ad placements, ensuring brand safety and access to high-quality traffic.
  • Reduced Ad Fraud Risk: With limited access to inventory, preferred deals minimize the chances of ad fraud.
  • Improved Transparency: Advertisers can have increased visibility into inventory availability, pricing, and campaign performance through direct agreements.
• Drawbacks for advertisers:
  • Finding Suitable Publishers: Advertisers need to invest time and effort in identifying suitable publishers who align with their target audience and are worth the higher price tag of a preferred deal.
  • Competition for Ad Inventory: Advertisers may have to compete with other buyers for the limited ad inventory available within the preferred deal.
• Preferred deals are ideal for advertisers who aim to reach specific audience segments without long-term commitments. They are particularly useful when advertisers have a clear understanding of their target demographic and have identified suitable publishers for their campaigns.

However, it is crucial to carefully weigh the pros and cons and evaluate the suitability of preferred deals for your advertising goals and budget before proceeding with them.