4 Programmatic Deal Types: When and Why to Use Each

Programmatic Deals automate ad transactions, helping advertisers reach the right audience efficiently while balancing control, pricing, and exclusivity. In this blog, get an overview of Programmatic Deal types i.e. (open auction, private marketplace deals, preferred deal, and programmatic guaranteed deals).

Each impression is unique, then why trade them equally?

With advancing technology, publishers have been introduced to multiple methods to sell their inventories. Among all the methods, there are 4 types of programmatic deals that are the most effective and flexible methods to sell their ad inventory in programmatic advertising. Programmatic Deals are automated methods that advertisers and publishers can use to buy and sell ad inventory. The four programmatic deal types include Private Marketplace deals, Preferred Deals, and Programmatic Guaranteed deals.

Programmatic advertising is dominating digital advertising by 82.21% plus, with ad spending projected to reach $726 billion by 2026. Thus, it is a need of the eleventh hour to know and understand your options when it comes to making a programmatic deal.

In this blog, we’ll cover what programmatic advertising is, different types of programmatic deals, their pros and cons, and much more. 

What is Programmatic Advertising?

Moving away from the manual negotiations, Programmatic advertising is an automated process that facilitates the buying and selling of ad inventory through real-time bidding (RTB) technology. The real brains of programmatic advertising are reflected by its power to leverage demographic and behavioural data, which can be used by publishers and advertisers. This technology makes sure that the right ad is shown to the right people at the right time. 

While this technology streamlines the ad buying process, understanding the programmatic deal types is the next important step in this process. Each programmatic deal reflects different levels of flexibility, control and most importantly, efficiency in ad inventory trading. These deals can be bifurcated into 4 types: Open Auction (RTB), Private Marketplace deals (PMP), Preferred deals, Programmatic Guaranteed deals. 

In simple words, Programmatic Deals are a predefined automated process of buying and selling ad inventory. Each deal has its own characteristics and benefits, publishers can explore these types and find the best fit for optimizing their ad revenue.

Now, it’s time to understand the four types of programmatic deals with their potential advantages and disadvantages for publishers.

Open Auction vs. Private Auction vs. Preferred Deals vs. Programmatic Guaranteed.

	RTB (Open Auction)	PMP Deals (Private Auction)	Preferred Deal	Programmatic Guaranteed
Auction	Yes, through real-time bidding.	Yes, it’s an invite-only auction	No, , it has fixed floor price	No, ad inventory is sold at a fixed price
Buyer	Multiple Buyers	Invited Buyers only	One buyer for many advertisers	One buyer for one advertiser.
Ad Server Priority	Lowest	Above Open Auction	Above Open Auction and Private Deals	Highest
Impressions Guaranteed	No	No	No	Yes
Negotiation	No	Minimum	May or May not	Yes (pre-deal negotiation, then fixed price)

Publishers can build a sustainable advertising-based publishing business with a stronghold on both direct and automated selling. Knowing how to trade your inventory will allow you to fetch higher rates for your inventory and potentially strengthen relationships you use for manual direct selling once you’re competent enough.

The Types of Programmatic Deals

By understanding these deal types, publishers can choose the right strategy to maximize revenue, protect brand integrity, and create a reliable platform for users and demand partners. There are various programmatic deal types that publishers can leverage, depending on their objectives and advantages. Let’s explore

Open Auction (Real-Time Bidding)

Also known as Open Exchange, open marketplace, real-time bidding

Participation: All (eligible) buyers on a platform

Priority: Ad servers set RTB at the lowest priority

Transactional Cost: 10-20% (SSP) 10-30% (DSP)

Open Auction or RTB is exactly what it sounds like. Publishers take a part of their inventory to the open market for multiple demand partners to bid on it.

It might sound chaotic; however, RTB is managed in a controlled environment. Publishers are allowed to choose the specific ad units to be placed in the open auction. Next, they can block advertisers and filter ad types as per their requirements. And most importantly, they get to choose the floor price for their inventory.

Similarly, buyers are allowed to set up a campaign before the actual bidding starts; this saves them time and helps them improve on the targeting front of the business.

Recommendation: Publishers are advised not to blindly put their ad units up for open auction. Ideally, remnant inventory is best handled by a real-time auction.

Here are some pros and cons of an open auction that you should know:

Pros:

• Ideal for Remnant Inventories: As mentioned above, the open auction is a great way for publishers to deal with a remnant inventory. RTB makes a wide range of advertisers available, based on the filters set by publishers, they can find varied demand and get a good price for unsold ad units.
• Quick Setup: Unlike other programmatic methods, the open auction takes fewer hassle and optimization steps to set up. You just need to select ad units, choose the floor price and add further criteria for auction, and you are all set. Moreover, it doesn’t ask for a deal ID, saving the sell-side and buy-side multiple steps of authentication.
• Easy Optimization: Real-time auction is fast-paced. Once set, you can see bids coming in almost instantly. Furthermore, it allows you to make changes to the setup anytime you want.
• Control over the Inventory: Even in the case of RTB, publishers want control over their inventory all the time. This control includes what types of ad creatives are being placed, who can check the details of the inventory, and what type of targeting is allowed.
• Unlimited Revenue Potential: Demand is not going to dry up on open exchanges. There may be seasonal downfalls, but otherwise, the revenue remains steady.
• Niche Advertisers: For newer publishers with niche content and too few pageviews to be sold on a niche-specific network, open auctions can help find relevant advertisers in a global market.
• Unsegmented Audience: Open auctions maximize yield for sites where the audience is a blend of demographic characteristics, and there is no unique value of either the visitors or the content. Sites like these benefit from DSPs’ targeting strategies, which enhance the value of impressions for buyers.

Cons:

• Data Leakage: In RTB auctions, the bid is available for varied advertisers to bid on; this increases the chance of data leakage. A bid request stores a lot of data, like publisher details and user demographics (cookie data). However, now we have data policies (GDPR and CCPA) and security measures to protect users from such malpractice.
• No Deal Guarantee: If the floor price is too high and/or inventory is not relevant for the available demand partners, it can still go unsold. In such a case, publishers are advised to carefully evaluate the value of inventory before deploying it in the market.
• Low Overall eCPMs: Compared to other programmatic channels, open exchanges have a much larger supply of impressions. This oversupply gives control to buyers and often returns low eCPMs to publishers.
• Malicious Ads: In an open marketplace, your inventory is not only available to varied advertisers but also to attackers. They keep an eye on vulnerable inventories and push their malicious creatives once they get a chance. Pinpointing the source can be difficult, thanks to media arbitrage and transparency issues.

Private Marketplace Deals (PMP Deals)

Also known as: Closed auction, private auction, invitation-only auction

Participation: Only invited buyers are allowed

Priority: Ad servers place private auctions at a higher priority than open auctions

Transactional Cost: 10% (SSP), 10-20% (DSP)

What is a PMP deal? It is an invitation-only real-time auction. Publishers send an invite to various advertisers and demand partners to place their bids on the available inventory.

Within the private marketplace, buyers participate in the deal with ‘first look’ criteria and then decide whether to buy it or not. Meaning, before making any promise to purchase the inventory, the buyer is first allowed to check the inventory to see whether it matches the buyer’s requirements or not. The invitation-only process makes the deal safer than the open auction. Publishers invite only trusted demand partners for the auction. PMP inventory is labelled ‘premium’ and offers differentiated ad inventory packages (built around audience data, impression attributes, content type, and more) to a group of buyers pre-approved by the publisher.

Mandatory use of Deal ID: In a private auction, the deal ID is mandatory and used to identify the seller and buyer during the auction. It is a unique string of characters defining things like priority, transparency, floor pricing, or data (depending on the platform you’re using). It is assigned to the inventory package, which allows it to be purchased programmatically through a DSP (Demand Side Partner).

Pros:

• Transparency: Thanks to the deal ID, sellers and buyers are able to identify each other at the point of the exchange. Buyers know what type of inventory they are getting. And sellers know who is placing ad creatives on their sites/apps.
• High CPM: Two factors make private marketplace deals more profitable: premium inventory and chosen advertisers. Premium inventory has higher ad viewability and user involvement. And chosen advertisers are willing to pay in good numbers for such placements. Hence, leading to comparatively better CPM for publishers.
• Fraud Prevention: Since the publisher and seller are directly involved in a deal, there is less chance of fraud, ensuring the safety of user data.
• Automated: It’s not plug-and-play like an open auction, but PMP deals are still automated among DSPs and SSPs, which means they’re less labour-intensive than direct sales.
• Better Buyer Relationships: Publishers and buyers can negotiate the terms and agree according to their mutual understanding. This gives them time to build strong relationships, resulting in a beneficial exchange between the two parties.

Cons:

• Difficulty Maintaining High-Quality Inventory: Advertisers will only agree to a good price if they find your inventory ‘premium’ enough. Otherwise, you might end up negotiating at a lower price. It may be difficult to maintain a high enough fill rate to surpass open auction revenue.

Miss out on opportunities: It is possible that some high-paying advertisers don’t get to make it to the list of publishers because of a lack of information on the publisher side.

Preferred Deals

• Also known as: Spot buying, private access, unreserved fixed rate
• Participation: One buyer
• Priority: Ad servers put preferred deals over the private and open auction
• Transactional Cost: <10% (SSP), 10% (DSP)

Under Preferred deals, the buyers get priority and exclusive access to inventory, at the cost of a pre-negotiated fixed price, before you make it available to everyone else in private and then open auctions.

The number of impressions is not guaranteed, but the audience is. Since buyers’ DSPs can use their audience data to review every ad impression before they decide to buy it.

Pros:

• Highly Targeted Ads: Impressions won in preferred deals are shown to very specific audiences enriched by DSP data, making it more relevant to your visitors.
• Better Buyer Relationships: Buyers reach out directly to publishers for the first-look privilege and price negotiation. Negotiation and speculation make parties build rapport.
• Creative Control: Publishers can review and approve the campaign creatives beforehand.

Cons:

• Low Fill Rate: Buyers have the liberty to cancel the subscription anytime. If that happens, inventory will go directly to the open auction. For this reason, it’s important to price and segment the inventory appropriately.
• Downfall Risk: With less competition, the impressions bought in preferred deals may get sold at a lower price.

Programmatic Guaranteed Deals

Also known as: Automated guaranteed/direct / premium / reserved

Participation: One buyer

Priority: Highest ad server priority

Transactional Cost: 3-5% (SSP), 10% (DSP)

What is programmatic guaranteed? Programmatic or automated guaranteed is where the premium inventories are exchanged. The publisher chooses one buyer and guarantees a number of impressions for a fixed (negotiated) price.

As the seller and buyer deal directly, it eliminates the chances of fraud. Next, for a fixed number of impressions, publishers get a good price for their inventory. And in the long run, publishers get to make better relationships with demand partners.

Programmatic guaranteed is different from direct deals. In direct deals, publishers keep control of inventory and present what they want to sell. However, in programmatic guaranteed deals, buyers are allowed to see all placements and choose as per their requirements.

Pros:

• Effective Use of Premium Inventory: Ad units with high user engagement and less banner blindness ought to be sold efficiently by publishers. This is where programmatic guarantees can help get a reasonable profit from the efforts of the publisher.
• Transparency and control: One-on-one dealing ensures control for the sell- and buy-side. Both parties are free to approve/disapprove of inventory or creatives. Because of this, parties can deal comfortably. 
• Creative control: Direct dealing creates an opportunity for publishers to ask for creative reviews before the deal signing. 

Cons:

• Underselling: Despite negotiating for highly valuable inventory served at top priority, publishers can’t accurately account for targeting parameters on the buyer side and/or viewability, which could lead to underpricing.
• Resource-intensive: Although everything is ‘automated’, publishers still need ad ops resources to make sure the campaign is executed as required.

Adpushup and Programmatic Deals

Still wondering about a smart way to maximise your ad revenue? Adpushup is a revenue optimization platform that can help you get direct access to the large pool of premium advertisers, ensuring better ad placements and optimized ad revenue. 

Programmatic Guaranteed: Our Standard and Sponsorship line items help you to sell all the impressions mentioned in your proposal. 

Non-Guaranteed: Run via preferred deals, this setup allows buyer to buy an impression based on their targeting criteria. Then they can choose to buy or leave the inventory for other demand partners to fill in. 

With Adpushup, you can control and optimize your ad inventory with the guidance of expert adops 24*7. 

Key Takeaways

• Programmatic helps publishers automate the ad buying and selling process, with a strong emphasis on control, flexibility, and efficiency. 
• With programmatic making up 82.21% of digital ads, understanding your deal options is more important than ever.
• Programmatic deals are bifurcated into 4 types: Open Auction (RTB), Private Marketplace deals (PMP), Preferred deals, Programmatic Guaranteed Deals. 
• The open Auction (RTB) functions as an open marketplace for demand partners to buy and sell ad inventory, which often comes at the cost of lower eCPMs. 
• PMP Deals are very exclusive as they include only invited demand partners to take part in the buying and selling of ad inventory. PMP deals often translate into higher CPMs, more transparency less ad fraud as it includes invite-only buyers. 
• As the name suggests, preferred deals allow a single buyer the opportunity to buy inventory before it becomes available to the open market. 
• Programmatic guaranteed is an exclusive way to sell ad inventory, including a single buyer negotiating a fixed price for guaranteed impressions. 

Frequently Asked Questions

---