Private Marketplace PMP: Where We’re Headed Now

Reading time: 4 minutes

The programmatic advertising[1] world has come a very long way and it’s still in a constant state of evolution. Or, as we should say, improvement. 

What began with direct sales led to ad networks and then soon enough ad exchanges. Each method of buying and selling ad impressions was born out of the inability of the method that came before. Now we have private marketplaces, which are essentially a solution to escaping ad fraud[9], among other things. 

In 2019, private marketplace deals were already accounting for the majority of programmatic spending. In that same year, it was estimated that a budgetary dent ranging from 5.8 billion to 42 billion dollars was put into ad fraud alone. This is what caused more and more advertisers to make the switch from the open marketplace to the private.

Now we’re here in 2021 and the method of privately buying and selling ad impressions is going strong—and it’s safe to say that it isn’t going anywhere. So, what does that mean for the future of ad tech[10] in terms of private marketplaces?

Read on to find out.

What Exactly Is a Private Marketplace (PMP)?

As the name suggests, a private marketplace[2] (PMP for short) is an invite-only marketplace within the programmatic deal ecosystem. PMPs are where publishers can go to make their premium ad inventory[11][5] directly available to the buyers of their choosing.

During the negotiation process in a PMP, a Deal ID is created and provided by the publisher[12]. This ID is then sent to the select buyer and serves as both an invite to the PMP and a key to the publisher’s specific ad inventory. It also allows both parties to agree on negotiation terms and the buying parameters, such as inventory type and floor price.

PMPs still work as real-time auctions, only the set-up is meant for a select number of advertisers which limits the competition and allows for not only privacy but a certain level of exclusivity. It also allows publishers to establish more long-term relationships with advertisers while providing a safer environment away from ad fraud and other common programmatic deal issues.

Open-RTB Vs. PMP

The primary difference between open auctions or open RTBs and private marketplace auctions is that PMPs are specifically invite-only. The publishers have to invite advertisers into the marketplace to bid on their ad inventory via Deal IDs. 

The invite-only concept is precisely what makes PMPs private, and that privacy is also what enables publishers to reach their brand safety goals. Of course, in an open exchange bidding event (the open-RTB[3]), advertisers have more visibility in terms of where their ads might appear, but that’s the extent of the transparency[6].

Private marketplace (PMP) deals provide both publishers and advertisers with much more transparency. In a PMP deal, advertisers know exactly what they are buying and publishers know exactly who they are targeting[13] as well as who will be placing the ads on their inventories. This isn’t even possible in an open exchange.

Additionally, in an open exchange, the ad bidding is open to all buyers on the platform. This means the publishers can’t cherry-pick among the buyers for their premium ad inventories. It also means they may not get the best deals for what they’re offering and they’ll likely have to deal with ad fraud, hidden vendor charges, mistargeted audiences, and the inability to connect with relevant buyers.

Ultimately, in private marketplaces, the publishers have more control over their ad inventories and there’s more of a guarantee for higher CPMs.  

The Benefits of a PMP

Private marketplaces come with a laundry list of benefits and very few drawbacks—hence the reason why PMPs have grown so much in popularity in such a short time. Not only do PMPs offer the most transparency for both publishers and advertisers, but they also provide the following benefits:

  • They give brands more control over where their ads are being placed and how verses of getting thrown onto any webpage. This also assures brand safety because there’s more control as to where their promotional material ends up.
  • They have created a new way for publishers to fill up their ad space as they can now connect directly with advertisers and offer up their best ad inventory by simply using an ad server. That means no more relying on a sales team or other middlemen to help them sell while taking a cut of the profits.
  • PMPs guarantee premium inventory, which means advertisers are getting the best impressions for their agreed-upon bids.
  • They give direct access to critical first-party[7] audience data to the advertisers which is what allows for more efficient audience targeting capabilities.
  • They allow advertisers to easily set up newer and better purchases for top websites that target their specific audience
  • Buyers are guaranteed to be presented with relevant ad impressions
  • They prevent ad fraud, bots, and spoofing from stealing ad dollars
  • They offer much higher CPMs for publishers and greater ROIs for advertisers 

What the Future Holds For Private Marketplaces

The Private Marketplace (PMP) concept isn’t going anywhere. PMPs are helping both publishers and advertisers as well as the platforms being used to grow quickly and more efficiently thanks to all of the benefits listed above.

In terms of PMP growth, you can now find multi-publisher PMPs that have become a great option for brands, buyers, and ad agencies alike. When it comes to multi-publisher PMPs, buyers are able to save a lot of time simply by creating a universal Deal ID rather than individual ones for each buyer. This allows for immediate scaling and efficiency, and they can also be tailored to the buyer’s needs. 

For publishers with premium ad inventories and first-party data[4] sets, it’s easier to attract advertisers and garner higher CPMs via these private auctions. 

Of course, this doesn’t exclude small or mid-market publishers. Get in touch with us to learn more about how we help new ad publishers like you better monetize their websites by setting up PMP deals on their ad servers[8] and more.

Terms
1. programmatic advertising. Programmatic advertising entails using machine learning and technology suites to buy and sell ad inventory with a data-driven process.
2. private marketplace. Private Marketplace deals or PMP is a direct deal made between a publisher and buyer for programmatic ad inventory. A PMP can also be called Preferred Deals. This practice contains much more human interaction unlike the alternative of selling ad inventory through an ad exchange. Often higher rates for ad inventory can be negotiated through this method.
3. Real-Time Bidding [RTB] ( RTB ) Real-time bidding is a technology-driven auction process where ad impressions are bought and sold almost instantaneously. Once an advertiser wins a bid for an ad impression, their ad is shown on a website. Real-time bidding plays a crucial part in the digital advertising ecosystem together with other players such as ad exchanges and supply side platforms.
4. first-party data. First-party data is the information that companies can collect from their own sources. In other words, every information about customers from both online and offline sources, such as the company's website, app, CRM, social media or surveys is first-party data.
5. ad inventory. Ad Inventory refers to the number of ad impressions available for sale on a publisher’s website or mobile app. In other words, these are the commodities available for the advertisers to buy on the website.

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