What are Preferred Deals?

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In the marketplace of ad selling and buying, more and more publishers and advertisers are favouring programmatic direct[1] and private marketplace[2] deals. This is because of how programmatic is changing transactions for the better overall, by contributing to the efficiency and quality of ad inventory[11][8] being brought to the table.

In this article, we’re going to talk about one method of transaction that falls under the programmatic umbrella: preferred deals.

What exactly are Preferred Deals?

Preferred deals are more commonly known as private marketplace deals or PMPs. Traditionally speaking, a preferred deal is a deal that’s made directly between a publisher[12] and an advertiser[9]. Or, between a publisher and an agency for programmatic inventory.

The private marketplace where preferred deals take place is known as a supply-side platform[3] (SSP). An SSP (sometimes referred to as a sell-side platform) is a technology platform that enables web publishers and digital media owners to manage their advertising inventory. They can fill up their section of the platform with their ads and receive offers and revenue for them

You can think of it as an eBay for price per click (PPC) and cost per mille (CPM[4]) ads. 

However, while SSPs can act as a public or private marketplace, PMPs don’t operate as open auctions. Instead, the publisher and the bidder[13] must first initiate contact and negotiate their rates, segments, and other terms. Of course, making contact doesn’t guarantee a deal.

The deal, or agreement in question, is for the bidder to provide preferential access to a publisher’s inventory before it can be auctioned off in the open SSP market. This preferential access is typically provided with the condition that the publisher’s CPM must be fixed.

Another caveat here is that preferential access means that the first buying opportunity goes to a specific advertiser, but that doesn’t mean the other party involved will be ready to buy it. This is why preferred deals are also referred to as programmatic non-guaranteed.

What are the Benefits of Preferred Deals?

When you’re a publisher, there are tons of benefits that preferred deals bring to the table compared to selling your inventory in a private or open auction marketplace.

Here are some of the benefits:

A Fixed CPM

CPM stands for cost per mille (or cost per thousand), and it allows publishers to generate their revenue based on the volume of impressions per ad. That means advertisers pay the publisher certain prices for a certain amount of impressions per ad — usually every thousand impressions.

With preferred deals, you get the guarantee that your CPM price will be fixed in exchange for providing the buyer with a first look advantage.

The Best Prices

When you auction off your ads, you often get lower prices than what you expected. With preferred deals, you’re providing premium inventory to select buyers, which means you can negotiate the best prices for what you’re offering. 

Controlled Prices

Open market auctions come with a lot of uncertainty in terms of pricing. When you choose to go the preferred deal route, you’ll be better able to predict the financial aspects of what you’re getting into. 

This gives you much more control over your inventory’s pricing which allows you to make better business decisions.

Lots of Flexibility

One of the best things about trying out preferred deals is that you won’t have to become totally dependent on one single buyer. If the first buyer doesn’t work out, you can find another to negotiate with.

If you’re not having any luck with buyers purchasing your inventory, then you can move it over to the open market and sell it auction-style. One way or another, your inventory will get sold.

Quality Control

With preferred deals, you get a chance to test out the merchandise by auditing the inventory and verifying the ad campaign[14] before running it on your website. This allows you to make sure that you’re only running high-quality ads on your website.

100% Transparency

With preferred deals, you engage in direct contact with the buyer or advertiser. That means the entire process is transparent since you can ask all your questions and audit the inventory before coming to an agreement. Therefore, you’ll know exactly what you’re getting.

How do Preferred Deals Differ from Programmatic Guaranteed?

Preferred deals are often confused with programmatic guaranteed as well as programmatic direct in Google Ad Manager[5]. While there are some similarities, their methods in terms of negotiations differ significantly.

For example, with programmatic guaranteed[6], the advertiser and the buyer negotiate the price and terms for the inventory that is already reserved. Hence the guaranteed part. 

That means that the inventory and its pricing are designated for only the buyer involved.

With a preferred deal, there’s a non-guarantee clause where the buyer has a “preferred” opportunity rather than a guaranteed reserved deal. In other words, the buyer is initially invited to bid on the negotiated price when there’s an ad request[10] for the inventory.

Preferred deals also lend the option for the inventory to be reserved for a premium price, but there’s no obligation to do this. 

Lastly, when we talk about programmatic direct, we’re talking about the options within Ad Manager’s campaigns to approach the buying and selling of ad inventory via programmatic guaranteed or preferred deals. 

Change is Advertiser-Driven

Advertisers have been realizing that programmatic buying[7], like preferred deals, allows them to take advantage of a higher-quality market of ad inventory. As tracking and analysis techniques aimed at their target audience become more efficient through new technological tools and platforms, they’ve seen that there’s a greater need for premium ad content if they want to continue to increase their bottom line.

Preferred deals allow buyers to take a first look at the ad inventory available while also allowing for them to negotiate the price and audit the quality, allowing for a greater advantage in the ad monetization world.

Terms
1. programmatic direct. Programmatic direct is where specified buyers get access to specified inventory that’s not necessarily available from an open marketplace or a supply-side platform (SSP).
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. supply-side platform. A technology platform that provides outsourced media selling and ad network management services for publishers. The business model resembles that of an ad network in that it aggregates ad inventory, however they serve publishers exclusively and do not provide services for advertisers (e.g., FreeWheel, SpotX).
4. Cost Per Mille/Thousand [CPM] ( CPM ) Cost per mille, or thousand (mille = thousand in Latin). A pricing model in which advertisers pay for every 1000 impressions of their advertisement served. This is the standard basic pricing model for online advertising. See also CPC and CPA.
5. Google Ad Exchange ( Google Ad Manager ) Ad Exchange is often referred to as the premium version of AdSense, and also a Google-owned ad network of sorts. To join Ad Exchange, publishers need to meet specific requirements such as 500 000 minimum monthly traffic, be invited or join through a Google certified partner. Recently Google has rebranded this product, and it is now called Google Ad Manager.

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