Programmatic ad buying refers to using software and technology to identify, bid on, and purchase digital advertising in an automated fashion versus engaging in manual negotiations. According to Zenith Media, programmatic ad spend is predicted to reach $84B in 2019, accounting for 65% of all the money spent on digital media. This spend is up 19% compared to 2018.
The programmatic ecosystem offers multiple ways to find and connect with the right publishers to efficiently reach audiences. In a nutshell, here’s how it all comes together: Media companies and advertisers tap into programmatic opportunities by working with a demand-side platform (DSP*), which then works with ad exchanges to build connections between media companies, advertisers, and publishers. Before jumping in, you need to understand the different ways programmatic inventory can be purchased.
Here’s a breakdown of a few methods:
Also known as an open auction, open marketplace, or RTB.
An open exchange is an open digital advertising marketplace that aggregates inventory from many publishers for buyers to programmatically bid and transact on. The impressions are available to all bidders. Every bidder on an exchange is allowed to set a bid on publisher inventory and the highest bidder wins the auction.
- Scale: Very broad. No predetermined relationships are needed to bid on inventory. Buyers have access to many publishers through an ad exchange relationship.
- Cost: Determined by an open real-time bidding auction where the ad exchange determines the winning bidder based on the highest net bid submitted.
- Publishers: A mix, including premium, long tail, and new publishers. DSP technology determines which publisher’s inventory is best for advertisers to bid on.
- Relationship with the publisher: You do not need to work directly with publishers to access their inventory.
- Audience: Open exchange inventory works well to add scale to potential audiences and expand reach for maximum impact.
Within private marketplaces (PMPs), there are two types of buying methods:
1) Invite-Only Auction (IOA)
Also known as a private auction, private marketplaces, private access, or closed auction.
PMPs are customized, invitation-only marketplaces where groups of premium publishers make their inventory packages available to a select group of buyers. The buyer negotiates access to inventory with the PMP ahead of time to create and agree on the terms of the relationship. Once the relationship is established, buyers work with an exchange to purchase inventory programmatically on a campaign-by-campaign basis.
- Scale: It depends on the group of publishers associated with a PMP deal and the ad inventory packages included.
- Cost: Pricing parameters are set by publishers and agreed upon by the pre-selected buyer.
- Publishers: Premium, world-class publishers.
- Relationship with the publisher: In most cases, buyers work directly with publishers to access the inventory. Publishers know who is buying their inventory packages and can use this information to give first-look privileges.
- Audience: The audience is confined to the audience of the specific viewers of the publisher(s) within the PMP terms.
Other benefits of IOA:
- Transparency: Both buyers and publishers have greater transparency into the transaction. Buyers have a clear understanding of what inventory packages they are buying and the price range.
- Exclusiveness: PMPs enable buyers to get access to exclusive and premium inventory.
2) Unreserved Fixed Rate
Also known as preferred deals, first right of refusal, or private access.
Preferred deals are made between a publisher and a specific buyer for a fixed-price CPM, usually focused on reaching a specific audience.
- Scale: Dependent upon the capacity of the publisher.
- Cost: Buyers pay a fixed price, which is predetermined.
- Publishers: Premium publishers with known names.
- Relationship with the publisher: The DSP works directly with the publisher to negotiate deal terms and gain access to inventory.
- Audience: The audience is very narrowly-defined and publisher-specific.
Other benefits of unreserved fixed rate:
- Exclusiveness: Publishers give the buyer priority and exclusive access to inventory before it is made available to everyone else and open auction.
- Accessibility: There is much more communication and control between parties as the relationship access is limited to the publisher and buyer.
Depending on your campaign goals, all these buying methods can be beneficial, and the relationships and technology of a DSP can directly impact your inventory strategy.
At ZypMedia, we power our partners with efficient DSP technology and relationships designed to connect local advertisers with the right premium, high-quality local audiences. We work with our partners to build the best inventory strategies for their advertising campaigns.
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*The demand-side platform (DSP) is the buyer/bidder in all the above-mentioned definitions.
Contributing Editor: Charel MacIntosh, SVP, OTT Channel Strategy & Sales at ZypMedia