Programmatic advertising is here to stay. US advertisers are expected to spend $81 billion (88% of digital ad spend) annually on programmatic display by the end of 2020.

Programmatic is a big umbrella; open auction, private auction, preferred deal, programmatic guaranteed, and more fall under it. All these types have their own pros and cons making publishers confused about what to choose.

We have already covered many of these programmatic deals in detail. And in this post, we will understand the preferred deal.

What is the Preferred Deal?

Preferred deal allows publishers to sell a part of their inventory to advertisers at a negotiated fixed price. Here, buyers have ‘first-look’ access where they can see the publisher’s inventory and then purchase it. Either publishers or advertisers can initiate this exclusive deal.

In practice, every time there is an ad request for the inventory, selected buyers will get the first (preferred) chance to bid for the inventory. If none of the buyers purchase the inventory, it is taken to the open market for auction.

How’s it Different from Other Programmatic Deals?

Preferred deal lies between programmatic guaranteed and private auctions. It is a non-guaranteed type deal, where inventory is negotiated rather than auctioned. Let’s understand it in detail.

Preferred Deal vs. Private Auction (PMP)

With preferred deals and private auctions, buyers are selected (invited) by publishers, hence, these methods are often confused. This is what make them different:

ParameterPrivate AuctionPreferred Deal
TypeAuction. No negotiation, highest winner is selected basis floor priceNot an auction. Inventory price is negotiated
BuyersNo ‘first look’ benefitsBuyers get exclusive access and ‘first look’ benefits before purchase
Server priorityLower than preferred dealHigher than private auction

Preferred Deal vs. Programmatic Guaranteed

In both these methods, selected buyers get exclusive access to the inventory causing confusion. Here are noteworthy differences:

ParameterPreferred DealProgrammatic Guaranteed
TypeNot guaranteed. No buyer is reserved for inventoryGuaranteed deal. Publishers get fixed price for guaranteed impressions
BuyersPublishers propose preferred deals to multiple buyers, choose one or more to close the dealClosed one seller-one buyer deal
Server priorityLower than programmatic directHigher than preferred deal

How Does Preferred Deal Work?

Generally, publishers with high traffic and engaging audiences go for preferred deals. Here’s how it works:

Case 1: Publishers send invitation to buyers to participate in preferred deal

  • Interested buyers accept the invitation and get in contact with publishers. Then terms are negotiated (price, impressions, and other requirements).
  • Publisher creates a proposal as per the negotiated terms.
  • Both parties review the campaign and start it.

Case 2: Buyer finds websites and pitch the deal

  • Publishers respond with the requirements and negotiate the terms.
  • Advertiser/buyer places an order for the inventory.
  • Publishers review and verify the order.
  • Campaign is started.

Pros

Control: From setting price for the inventory to choosing buyers, publishers always remain in control. Selling inventory via preferred deal takes away the uncertainty as publishers know the selling price beforehand. Whereas in open auction, publishers can only guess the inventory benefit. Similarly, publishers don’t get to choose the buyers in open auction, however, they can choose, remove, and even block buyers as per their requirements with preferred deal.

Transparency: Preferred deal allows a direct mode of exchange between seller and buyer. Meaning both the parties remain in a transparent communication channel asking what they want with this deal. This makes preferred deal a transparent exchange method for both buyers and sellers.

Security: As publishers get to choose buyers, they can eliminate risky advertisers and competitors. This gives both the parties a chance to avoid ad frauds, whereas open market doesn’t take these criteria into consideration.

Better monetization: Publishers often put their premium inventory up for the preferred deal, hence, in return they expect a good profit. With preferred deals, publishers can send their proposal to multiple buyers and pitch their inventory for better monetization.

Flexible deals: Since, preferred deals don’t depend on one buyer, publishers have flexibility to choose from multiple buyers making it more flexible. Simply put, publishers can move to the next buyer if the previous one doesn’t feel like offering a good deal.

Cons

Blank impressions: Since buyers have the option to see and buy impressions, this increases the chance of buyers not purchasing the impression at all (in cases like inventory not up-to-the-mark or due to seasonal downfall). This can lead to unsold inventory or blank impressions. One possible solution can be adding optimal fallback settings—like using AdSense / RTB as fallback in case of unfilled impression.

Manual efforts to find good buyers: To sell inventory at a good price, publishers have to put manual hours to list down potential buyers. This listing also includes auditing the historical performances of these buyers and creating a pitch to make them interested in your inventory.

Extensive negotiation: Once the inventory is pitched and buyers seem interested, the negotiation process begins. This, again, is a manual process, where publishers have to be in constant communication in order to make a sale taking weeks or months. To combat this problem, publishers generally take help of an in-house inventory sales team and outsource the tasks for better results.

How to Set up a Preferred Deal in Ad Manager

Prepare your GAM for preferred deal:

  • Enable programmatic direct: Go to Admin >> Global Settings >> Features. Turn on the Programmatic Direct here.
  • Link Google Ad Manager and Ad Exchange
  • Describe your inventory: Go to Sales >> Deals. Here, create your publishers profile and add details of your inventory for buyers.
  • Specify the type of inventory: Go to Admin >> Global Settings. Here, configure your inventory type. This should help buyers while negotiating the price.

Steps to create proposal in GAM:

  • Go to Sales >> Proposal >> New Proposal.
  • Add details related to your proposal.
  • Next, create proposal line items by clicking on New line item.
  • Add line items to the proposal, select it to be a preferred deal.
  • Save the settings.

Now you can send this proposal to various buyers. If they agree, you can move proposals to executed campaigns.


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