Private marketplaces (PMPs) are exclusive auctions curated by publishers, where a limited audience of advertisers is selected. PMPs provide publishers with greater control over ad placement and often offer premium advertising positions.

What is a private marketplace (PMP)?

A private marketplace (PMP) provides advertisers with the opportunity to bid on select ad spots. PMP falls under the umbrella of real-time bidding (RTB), where publishers invite a limited group of advertisers to compete for top positions.

PMP deals offer advantages to both publishers and advertisers. Publishers can maximize revenue by commanding higher prices for premium ad space, while advertisers gain access to coveted placements.

These semi-exclusive spots grant advertisers more control and higher quality, allowing them to strategically choose the inventory they want to bid on.

The RTB process provides immediate user insights, and PMPs offer additional audience information, such as demographics and location, enabling advertisers to target specific segments with their ads.

In recent years, the private marketplace (PMP) has gained prominence and become a preferred solution for ad spending, surpassing the traditional open exchange in popularity.

What is a deal ID?

A deal ID is a unique identifier generated by publisher ad servers for each bid request. It serves as a shared number between the buyer and seller to determine which participants are eligible to enter the auction or place bids on specific ad inventory.

Negotiating the terms associated with a deal ID can be a time-consuming process that involves additional steps. However, deal IDs offer valuable information about prior agreements that may have been established through preferred deals or programmatic guarantees.

While not every preferred deal utilizes deal IDs, as some may rely on tags, deal IDs provide the advantage of containing more detailed information without impacting the functionality or loading speed of the page or ad.

By employing multiple deal IDs, a single impression can be entered into multiple private marketplaces (PMPs), allowing for a comparative evaluation of results. This approach expands the reach of the PMP while maintaining its exclusivity and keeping it separate from the open exchange.

How does a private marketplace (PMP) work?

While PMPs operate within the realm of real-time bidding (RTB), they occupy a middle ground between programmatic and open auctions. In a private marketplace, intermediaries are eliminated from the programmatic advertising process, reducing the open and unrestricted nature of open auctions by creating a more exclusive environment.

Unlike in open auctions, there are no ad exchanges or supply-side platforms (SSPs) involved in facilitating placements within PMPs. Instead, PMPs are typically offered by large websites known for their premium quality, such as The New York Times or Wall Street Journal. These private marketplaces provide transparency regarding available ad spaces and the inventory being offered.

Access to PMPs is restricted to advertisers who have been specifically invited with a Deal ID. Only those advertisers with a valid Deal ID can enter and participate in the PMP auction, ensuring a more controlled and selective environment.

Private marketplace (PMP) benefits

Two significant concerns in the realm of RTB are the potential for fraud and the lack of control over ad placement.

PMPs have emerged as a viable solution to address these issues. By implementing a bid arrangement with set values and enhanced transparency, PMPs reduce the risk of fraud and provide a more secure advertising environment.

One of the key advantages of PMPs is the increased control they offer to advertisers and publishers. They ensure that campaigns are placed strategically, avoiding insensitive or awkward ad pairings.

Programmatic advertising through PMPs proves to be highly efficient for advertisers, especially when targeting top-tier websites. It has the potential to replace costly in-house direct-sales teams that traditionally dedicate significant human resources to manually purchasing ad spots.

Furthermore, the scope of PMPs is expanding beyond premium inventory and ads. There is a possibility that PMPs will extend to mid-range publishers and include advertisers seeking broader placement opportunities, moving beyond exclusive prime spots.

PMPs provide enhanced brand management, which is particularly beneficial for top-tier publishers and advertisers. Brands can exercise greater control and protect their reputations by ensuring meaningful ad placements and fostering alignment between advertisers and publishers to avoid poor ad placement. As a result, PMPs have gained popularity in recent years.

Private marketplace (PMP) drawbacks

While PMPs offer advantages, there are some drawbacks to consider. In certain cases, the open exchange may provide a better solution with a higher yield, as PMPs can be pricier and do not guarantee a captive audience. Advertisers who are testing campaigns or in the early stages of ramping up their strategy may hesitate to pay for prime spots.

Additionally, advertisers may opt to wait and bid in an RTB auction to secure a lower price, as they may not necessarily require the first placement at a premium cost.

Moreover, PMPs require more time and manual interaction compared to the streamlined nature of the open exchange.

PMP vs. open auction (RTB)

Contrasting with an open exchange or RTB, PMP deals involve a set floor price at a premium cost. This pricing structure is justified by the high-quality inventory and increased transparency in ad placement.

When buying a PMP placement, there are fewer unknowns compared to the open exchange. While any publisher can offer spots in the open exchange and any advertiser can bid, PMPs operate differently. Publishers are carefully selected, and only a specific group of advertisers are invited to place bids, ensuring a more controlled and targeted advertising environment.

Preferred deals explained

In a preferred deal, the buyer has the opportunity to bid at a negotiated price, but there is no guarantee that the deal will be accepted. Unlike other types of deals, the inventory in preferred deals is not reserved exclusively for the buyer. The publisher can choose to reserve it with another buyer if they offer a better price. Buyers are also not obligated to purchase inventory in preferred deals, giving them more flexibility.

PMP vs. programmatic guaranteed

In comparison to a private marketplace (PMP), programmatic guaranteed deals offer an even higher level of exclusivity. Programmatic guaranteed deals involve fixed-price slots with a specific number of guaranteed impressions. The auction process is still automated through demand-side platforms (DSPs) and supply-side platforms (SSPs).

When publishers establish relationships with advertisers, they often provide discounts and bundled deals to incentivize future collaborations. Minimum bid prices and deal parameters are often discussed between the participating parties before the Deal ID is created, allowing for greater transparency and negotiation.

The future outlook of private marketplaces

In 2020, private marketplaces surpassed programmatic advertising expenditure for the first time, indicating their growing significance. Programmatic advertising spending experienced a significant surge in 2021, with a 41.2% increase, and it is projected to reach $123.22 billion in the United States alone, as reported by eMarketer.

Industry experts anticipate that private marketplaces (PMPs) will continue to gain a larger market share due to the enhanced control they offer to both advertisers and publishers. Additionally, concerns regarding malware incidents in the open programmatic marketplace have played a role in the increasing popularity of PMPs.

According to The Media Trust, Q4 of 2021 saw a 64% increase in malware incidents compared to the same period in 2020. Malicious redirects experienced a surge of 170%, and fake antivirus software update ads increased by 50% throughout 2021.

Private marketplaces, on the other hand, contribute to mitigating these threats. PMPs provide high viewability, engaged audiences, and fewer impressions influenced by bots. Top-tier publishers are actively striving for data clarity and audience segmentation to outperform the limitations imposed by third-party cookies, as highlighted by The Media Trust.

However, challenges persist for the middle segment of publishers and advertisers. PMPs need to find scalable solutions to cater to this middle ground, which consists of publishers and advertisers who fall between small-scale and large-scale operations. This segment is often left to traditional programmatic advertising practices.

Time and cost are the primary concerns that can make Private marketplaces (PMPs) less than ideal for this middle segment, as they may require additional resources and investments.

KEY INFORMATION ABOUT PRIVATE MARKETPLACES (PMPS) TO REMEMBER

• The private marketplace (PMP) is a subset of real-time bidding (RTB) that restricts the number of advertisers participating in the auction.
• PMPs offer increased transparency, allowing advertisers to have a clear understanding of available ad spaces and ensuring higher-quality ad placements.
• PMPs effectively prevent a significant amount of malicious advertising that is prevalent in the open exchange.
• The deal-making process involved in PMPs can introduce delays and result in higher costs due to the premium nature of the offerings.
• PMPs have faced challenges in scaling to meet the needs of mid-level publishers and advertisers who prioritize cost and efficiency.
• Despite these challenges, PMPs have been growing in popularity and have surpassed programmatic spending in recent years.