Programmatic advertising is projected to be a game-changer for digital advertising globally. Now, before we dive into the types of programmatic deals possible, let’s understand how programmatic differs from traditional media buying. In traditional media buying, if advertisers or agencies want to buy ad inventory, they reach out to publishers or ad networks to discuss ad sizes, rates, etc. Programmatic automates this process with the help of technology and data. The middle-men are removed, and unnecessary negotiations on rates and positioning are no longer part of the media buying process. The ad buying process becomes more efficient, faster, targeted and relevant.
Now let’s take a closer look at the different types of programmatic deals.
There are two sub-categories of programmatic: real-time bidding (RTB), where ad placements are made possible via an open auction; and programmatic direct, which means select buyers are invited to private auctions where the ad buy is placed directly between a buyer and a seller.
Types of programmatic advertising
- Real-Time BiddingReal-time bidding or RTB is also known as an open auction where ad space is unreserved. Pricing is determined via an open auction. A pool of impressions is made available for advertisers to be purchased through auction-type bidding. Each impression is sold as it becomes available, in real-time. Advertisers can automatically tweak their bids based on changing market conditions. In RTB deals, however, quality of available inventory can’t be guaranteed.
- Programmatic DirectIn this type of programmatic advertising, reserved inventory is bought at a fixed price. Publishers reserve a portion of or their entire inventory for a particular buyer or set of buyers instead of selling this inventory through an ad network or other sales techniques. The transaction is then executed via third-party companies guaranteeing ad space and impressions with considerable control over terms and pricing. Put simply, in this form of programmatic, buyers and sellers are known to each other.
- Preferred DealsThese are direct deals between publishers and advertisers or agencies. The buyers and the sellers negotiate the conditions (volume, pricing, targeting) of the deal. Sellers provide a deal ID with which the buyers can then directly buy inventory. These programmatic deals aid in making better decisions by using data to determine whether to bid on, and purchase, an ad impression at the negotiated price. Advertisers get priority and exclusive access to inventory without any commitment to buy.
- Private Market PlacesA Private Market Place, or PMP, gives exclusive access to a publisher’s inventory to advertisers. Most of the demand side platforms (DSPs) run their own PMPs where only the DSP’s customers can access the offered inventory. These are invitation-only auctions. These have higher priority than an open auction, giving buyers access to premium inventory before it becomes widely available.
Programmatic advertising is slowly becoming the norm for digital advertisers, and is expected to grow and expand in different ways in 2018.
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