Programmatic Advertising Essentials: What Is A Private Marketplace?

Digital Advertising

5 min read

Private marketplace (PMP) is one of the most popular approaches to advertising technology. It is similar to the open auction but there are few different features.

Programmatic Advertising Essentials: What Is A Private Marketplace?

A Brief Overview: Programmatic Advertising

In the past, digital ads were traded between publishers and advertisers by e-mail. In time, with the growth of digital advertising volume and the rising number of advertisers and publishers, the traditional method became more complex and difficult to sustain with manpower. Consequently, the ‘programmatic advertising’ term has entered into our lives. It is important to emphasize that programmatic advertising, which allows faster, more efficient, and safer ad trading, has made a big difference in a short time.

What Is A Programmatic Advertising?

Online ad trading uses some parts of advertising technology(AdTech) to create better abilities. It manages the dynamic process transparently, quickly, and accurately because it’s supported by algorithms and softwares. Automated auctions helps to minimize error rate and time loss. Programmatic advertising gathers data through user’s browsers ( e.g cookies, IP, pixel tags), analysis every piece of information, including behaviors and preferences. It provides targeting options for SSP-DSP sides along with highly relevant ad viewing experiences for visitors, it also creates ample opportunities for brands such as reaching potential customers, increasing interaction rates, developing the marketing strategy, and brand awareness. Thanks to these features, the market share of programmatic advertising has reached remarkable levels in the digital world.

How Does Programmatic Advertising Work?

It takes place between publishers with the available ad space and the advertisers or ad networks who want to buy online ad space. Platform brings together a variety of potential advertisers and publishers. The primary goal is providing a perfect match environment for efficiency. In short, it consists of SSP (Supply-Side Platforms), Ad Exchange, and DSP (Demand-Side Platforms) components.

What Is A Private Marketplace (PMP)?

Private marketplace (PMP) is one of the most popular approaches to advertising technology. It is similar to the open auction but there are few different features. The ad buying and selling process works in real-time and programmatically; however, publishers restrict participation to only invited DSPs. Mostly, SSPs offer their premium inventory to a specific group of DSP partners. Also, it is not guaranteed method.

How Does A Private Marketplace Work?

Before the publishers make their inventory available in an ad exchange, they decide which inventory will be sold at a private auction. Then, the deal is created with deal id between SSP and DSP, after discussing necessary details such as floor price and inventory. When a user visit publisher’s app or website, the process begins. The SSP sends a bid request to Ad Exchange via publishers’ ad server, then the ad exchange sends bid requests to DSPs. The DSP evaluates the request and if the request meets the advertiser requirements, they send a bid response with price and ad details. An auction is conducted between only selected DSPs. The ad exchange collects all bids and selects a bid. Usually, the highest or second-highest bid wins the auction. Ad Exchange sends the winning notification and the invoice to the winning DSP. Technically, the whole process is completed in milliseconds.

Private Marketplace Benefits For SSPs

Publishers have more control over their inventory. DSPs can be examined closely. So, they can fill their ad placements with more reputable brands’ ads.
DSPs are willing to pay higher CPM (Cost Per Mile) for premium inventories. Thus, SSPs can generate higher revenue with this model for selected premium inventory.
It provides a safer auction environment compared to the open auction model.

Private Marketplace Benefits For DSPs

By purchasing premium inventory, DSP gains exclusive access to audiences with high conversion potential. This returns to advertisers as ROI (Return Of Investment) and increased sales rates.
In the same way, DSPs also care about brand protection. Publishers and inventory can be examined closely. Safety concerns are eliminated because they know from whom they are purchasing inventory.
Advertisers working with well-known publishers can increase their brand reputation and awareness.

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Private Marketplace Downsides For SSPs

Some of the Ad Exchange platforms do not allow inventory to be used in more than one model. For instance, An inventory cannot be offered for sale in the private auction and open auction models simultaneously. At this point, it is important to analyze the return on investment (ROI) of both auction models and deciding which one will be more beneficial. Although the private marketplace provides high CPM rates, the same SSP can have a higher rate of return in the open auction model. In addition, Exchange platforms that allow the inventory to be evaluated simultaneously in different models can also be preferred.
Malware and bots can spoof IP addresses, cookies, and other essential details. Although it is more secure than the open auction model, it cannot provide full protection.

Private Marketplace Downsides For DSPs

There is no obligation for SSPs to meet a certain impression volume which can cause disadvantages. However, if the details provided by the SSP for the inventory (Impressions, unique user rates, click-through rates, etc.) are carefully examined, strong estimates can be made for impression volume.

What Are The Difference Between Private Marketplace And Preferred Deal?

In digital advertising, there are various types of ad buying and selling, according to the business strategies. All these types have their own advantages and disadvantages. Although these species have similar characteristics, they show significant differences.

Preferred Deal: SSP and DSP sides agree on a fixed price. Unlike private auctions, these DSPs have the first chance to bid for the inventory. On the other hand, inventory cannot be guaranteed.

Conclusion

When everything is taken into consideration, Private Marketplace is one of the ad buying and selling types provided by the Ad Exchange. It offers great opportunities for SSP and DSP sides to achieve their goals in terms of income, interaction rate, strong target audience, brand safety, transparency.