Programmatic advertising is the subdivision of digital advertising and it brings automation and efficiency to the advertisers. Using it, advertisers can show their ads to the people interested in particular in an automated way.
Within this programmatic advertising landscape, the private marketplace (PMP) is one key category that provides an opportunity to buy and sell exclusive ad inventories.
As a market manager, it’s essential to understand the landscape of PMP to deliver your ads on premium inventories. In this article, I have explained the needs of PMP for advertisers as well as publishers, processes, types of private marketplaces, etc.
[This article is too long but you can understand the PMP entirely after reading this article]
What does PMP stand for in programmatic advertising?
The expansion for PMP is “private market place”. It’s a subcategory of programmatic advertising, where publishers make their inventory only available to the selected advertisers on an invitation-only basis.
Example: The New York Times is a premium website (Publisher). They want to display a certain quality of ads on their website and sell their ad space at a good price.
Otherwise, many advertisers or buyers are ready to deliver their ads on premium sites like the New York Times.
Both publishers and advertisers expectations can be achieved through PMP or Private MarketPlace.
How does PMP work?
To understand the workflow of a private marketplace, you should know the process of real time bidding. Here, I will explain the RTB in a simple way and then explain the PMP.
Publishers or websites that want to sell their ad place are connected with the SSPs (Supply Side Platforms)
Advertisers or buyers who need ad places to display their ad are connected with DSPs (Demand Side Platforms)
Usually, one SSP connects with many ad exchanges and demand side platforms to sell the publishers ad space at a good price.
Similarly, one DSP connects with many SSP and Ad Exchanges to buy the suitable ad space at a good price.
Both publishers and advertisers connected through ad exchanges. Here only the ad auction will be conducted.
Let’s take an example, 1000 websites are connected with an SSP called XYZ and this SSP is connected with two ad exchanges ABC and DEF.
You are an advertiser and you have connected with the DSP called MYV. Your DSP is connected with one of the above ad exchanges called ABC.
Whenever someone visits any of the above 1000 websites, the ad request will be forwarded to XYZ SSP for looking at an ad. XYZ SSP forwarded the ad request to the connected two ad exchanges ABC and DEF.
Your DSP MYV connected with one of these ad exchanges ABC. So, all advertisers under your DSP get the ad request. Which advertisers targeting is matched with the ad requests can send the bid response with bid price.
Likely, bid responses received from many advertisers and the auction is conducted real time. Which advertiser’s bid price is high will win this auction and their ad will be displayed.
This is the simple workflow of RTB and this is how the entire programmatic advertising works.
In the above example, any advertiser from any DSP can participate in the ad auction. So, publishers don’t have any major control here to choose the advertisers or price limits, etc.
Here only PMP comes in.
The advertisers directly contact the publishers where they want to display their ads. They negotiate the price and amount of ad inventories they expect.
Once negotiation is done, the corresponding publisher generates a unique identifier on Server side platforms. This unique identifier is called “Deal Id”.
Already, I wrote this detailed article that explains the types and functions of deal id.
This unique identifier is shared with one or more advertisers those who negotiated already.
Once advertisers have that deal id, they need to setup their campaign with that deal id. Similarly, one or more advertisers setup their campaigns on their own DSP.
Whenever an ad request is generated from the publisher, it is sent to multiple exchanges. But, advertisers that have a particular deal id only received the bid request and they can only respond to that bid. (Highlighted In Red Colour)
Through this PMP feature, only limited known advertisers only participated in the ad auction.
What are the types of PMP deals available now?
Below are the types of PMP deals currently available,
Private Auction Deals
Preferred Deals
Programmatic Guaranteed Deals
The above deal types are categorized based on inventory allocation and price type.
In private auction deals, certain groups of advertisers were invited to participate in the ad auction. A floor price is set by the publishers and advertisers can bid above the floor price. Who bid more wins the auction.
In preferred deals, the price is already negotiated and it’s a fixed price. So, advertisers always win this bid.
The final one is programmatic guaranteed deals, here the publishers directly connected with one advertiser at a time. The publishers negotiated the price and amount of impressions.
Advantages of PMP
Below are the advantages of the PMP feature,
- Publishers can control the type of ads delivering on their ad inventories by choosing the advertisers.
- Publishers can negotiate the price for their ad inventories.
- Publishers earn more money through PMP.
- Advertisers can avoid the crowd in ad auctions and they can show their advertisements on premium sites with less competition.
- Advertisers can work with publishers to tailor the audiences based on demographics, interest and etc. So, advertisers can target particular group of audiences.
Conclusion
Programmatic advertising is a complicated network where many tech players play together to make this happen. The buyer and seller in this network is advertisers and publishers. In open auction, any advertisers connected with the particular ad exchange can participate in the ad auction.
So, publishers do not have any control on choosing the advertisers and price for their ad inventory. This could be a main problem for premium publishers.
To solve this problem, PMP was introduced in programmatic advertising. Both publishers and advertisers connected on an invite basis. The publishers create a unique deal id and share it with selected advertisers. So, the selected advertisers can only participate in the ad auction.
PMP has many advantages over traditional open auctions. Because, publishers can make more money by selling their ad inventories to the selected advertisers. Other hand, advertisers can show their advertisements on premium websites with less competition.
