Programmatic advertising strategies utilize automated technology for media buying. This revolutionized process of buying advertising space employs algorithms and data insights to target the right audience. Since 2020, programmatic ad spending has increased by over 29% in the U.S. alone, which illustrates the growing opportunities to buy or sell digital advertising.
Programmatic Guaranteed and PMP, or Private Marketplace, are types of programmatic advertising strategies that allow publishers to better monetize their content. Both strategies take place on a demand-side platform, or DSP, that allows for cross-platform ad inventory purchases. These transactions occur behind closed doors, which allows publishers and advertisers more control over how they use optimization of their transactions. However, there are also key differences between these types of deals, such as the kind of publishers and buyers they involve.
What is Programmatic Guaranteed?
Programmatic guaranteed is an automated sales method where a publisher sets a guaranteed volume of ad impressions an advertiser or buyer will receive based on a fixed price. Occasionally, the publisher and buyer may negotiate the price for the set number of impressions. But once agreed upon, the volumes and prices are guaranteed for both parties. This process resembles regular media buying, but as you’ll read below, its automated aspect provides added benefits.
The Pros and Cons of Programmatic Guaranteed
There are many pros and cons of programmatic guaranteed. Let’s look into some of these benefits and disadvantages to help you decide if this could work for your ad space.
Programmatic Benefits For Advertisers
Programmatic benefits for advertisers include:
- 100% visibility and transparency into publisher inventory and ad performance. Since everything is controlled programmatically, ad buyers will fully understand how the ads are selling on a page-by-page basis.
- Real-time bidding: With ad-buying occurring in real-time, it allows for easy optimization to ensure maximum results.
- Ability to use scalable and real-time data from other sources such as Google Analytics or other 3rd party data. As a result, they can understand the audience they’re targeting better and serve them with relevant messaging.
Programmatic Disadvantages For Advertisers
Programmatic disadvantages for advertisers include:
- Time-consuming set-up: Setting up programatic deals require a significant amount of back-end work, such as locating a publisher or advertiser and negotiating the deal.
- Higher CPMs: There are no guarantees on CPMs. Advertisers can end up paying more than expected if any competitor decides to buy the inventory at a higher price.
What Are the Different Types of Programmatic Deals?
There are four fundamental types of programmatic deals, each of which provides a unique benefit.
- Open auction, also known as an open exchange, is when publishers sell any premium inventory available to the highest bidder. Any marketer on the ad network has the opportunity to bid on the available inventory. This is the most common and traditional type of programmatic deal because it generally leads to higher CPMs than other types.
- Private auctions, or private exchanges, still involve bidding but are only available to a few select advertisers instead of being open to all. Typically, the publisher will handpick the invited advertisers. This is good for both parties since it ensures inventory exclusivity without affecting CPMs.
- Preferred deals are a private interaction between an advertiser and the publisher in which the publisher presents the advertiser a ‘first-look’ at the premium inventory.
- Programmatic guaranteed deals consist of an agreement between publishers and buyers where reserved inventory is sold to a buyer ahead of time at a fixed price. The publishers deliver the ads at a mutually agreed-upon date and time.
Is Programmatic Direct the Same as Programmatic Guaranteed?
Programmatic direct describes any programmatic deal where an advertiser buys ads directly from a publisher without using an agency. There is a one-to-one relationship between the publisher and advertiser, and there is no bidding.
Therefore, programmatic guaranteed deals, where publishers reach out to advertisers to offer a reserved inventory, are an example of a programmatic direct deal.
Preferred deals are another type of programmatic direct deal since they too involve a one-to-one interaction between the publisher and the advertiser.
Examples of Programmatic Advertising Platforms and Companies
A Doubleclick Bid Manager (DBM) gives advertisers, trading desks, and advertising agencies access to ad spaces in real-time. It helps media buyers to reach a bigger audience which increases the efficiency of their marketing campaigns. It provides real-time data to enhance the accuracy of their campaign.
FlexCast™ platforms allow publishers to create interactive, rich-media experiences using programmatic ad units like video ads and interstitials. This increases monetization efforts and revenue by enabling direct sales teams to acquire demand partners who guarantee fill rates for specific inventory sources.
FANALA is an example of a company that offers programmatic guaranteed deals. Publishers can create an agreement between them and a demand source, where the price of their inventory will be set. The inventory can then go live once the publisher confirms its availability with the DSP.
What Is a PMP?
A PMP, or private marketplace, is a direct environment where ad shops buy and sell inventory with their clients. PMPs create a mutual agreement between the publisher and an advertiser about ad inventory. The publisher sets the deal terms like price, demographics, devices, placement type, timing, offer exclusivity, etc.
The advertiser then has to validate their ability to deliver on what they’ve promised before the campaign’s performance can start. Both parties agree on how the PMP will be paid out.
How Do PMPs Work?
In a PMP, deals occur on a case-by-case basis outside of exchanges, so no automation necessary. A publisher may also decide to pursue a PMP programmatic deal, which is a type of programmatic direct deal where the advertiser and publisher agree to specific SSP (supply-side platform) inventory terms before a campaign starts.
Why Do Advertisers Use PMPs?
Advertisers use PMP ad networks because they give them the ability to target audiences with specific audience data points, have priority access to inventory, and use particular ad units like video ads. They have their downsides, but they also work very well for many advertisers.
PMP Benefits For Advertisers
The main PMP benefit for advertisers is brand reputation because publishers are committed to providing high-quality inventory. Publishers invite advertisers that they choose personally to organize a private auction on their ad inventory. They are also up-front ads with no hidden charges, and bidding typically runs very efficiently.
It also has these benefits:
- They offer better inventory control and provide more flexibility for the publishers with how they want to sell the package, and they can also decide on the terms.
- Publishers can offer participating advertisers direct access to their own first-party data using their deal ID – this helps advertisers gain confidence in what market they’re targeting.
PMP Disadvantages For Advertisers
The main disadvantage for advertisers is the potential lack of revenue and transparency. Since this is a direct deal and campaigns can’t be tracked as effectively, revenue might be lost.
In addition, since ad exchanges currently have the upper hand, advertisers who utilize PMP will notice that their ads don’t receive the same priority level in ad space. While this isn’t ideal right now, the good news is that PMP market share has been on the rise, so this issue may resolve itself in the coming months and years.
Other disadvantages of PMP include:
- Ads are easy to undersell – if you forget to go back in and make changes to the price, they could be forgotten about and sold for much less than what they’re worth.
- Although PMPs are exclusive and offer a premium inventory, ad fraud is a known issue. Bots can piggyback on infected computers and copy the work someone is actually doing behind the scenes to manage them.
How Do Publishers Benefit From Private Marketplace Advertising?
By engaging in PMP private marketplace advertising, publishers benefit through newly formed, long-lasting, transparent relationships directly with advertisers.
However, there are costs involved in setting up a private marketplace deal. If the potential revenue isn’t high enough, setting up these relationships may not be worth the publisher’s time or effort. Publishers should always do their due diligence when starting any type of advertising relationship to make sure that the effort required will pay dividends in the long run.
In any advertising deal, sales teams should only invest in ad spend if they see an uptick in the number of impressions and their inventory sold. It’s crucial to remember that the quality of leads coming in is more important than the number of total leads. Ten thousand views aren’t helpful if only one of them invests in your product.
In review, programmatic guaranteed and the PMP model do share some similarities, amidst their differences, as options for mobile advertising.
Both models are based on real-time bidding, for instance, and they both operate using the same ad exchange technology. In both PMP and programmatic guaranteed, advertisers can target audiences based on their first-party data. And in both models, brands only pay when the user views your ad.
That said, there are some pretty significant differences between PMP and programmatic guaranteed. For starters, advertisers love the increased revenue earned via private deals when utilizing PMP. The direct communication and increased transparency between publishers and advertisers make the entire transaction much simpler. And publishers enjoy having more control over the types of ads being displayed to their site visitors.
In the end, there’s no right or wrong answer when it comes to selecting programmatic guaranteed or PMP advertising for monetizing your website. If you need help deciding between the two, reach out and we’ll help you through it. Or try our free earnings calculator and find out how much ad revenue your site could be earning! Additionally, we offer ad management and solutions. So, we can better optimize your ad experience all around!