The fact that publisher revenues are under siege from a number of sources isn’t exactly news.
Users are abandoning desktop in droves, continuing the progression from print dollars to digital dimes to mobile pennies. Remaining desktop users are blocking ads with increasing regularity. Companies like Facebook, the dominant source of publisher traffic, is gently prodding content creators to publish to the platform directly, taking said creator’s own properties out of the loop entirely.
But perhaps the most significant of the numerous threats is the trend of major ad agencies going “100% programmatic”—which means stopping the guaranteed revenue I/Os and tag-based buys of yore (i.e., three-plus years ago) and setting up private marketplace deals, also known as PMPs, instead.
You’ll want to read this if you are:
- A digital publisher that’s being asked to set up a number of PMPs by current/former agency clients and wants to protect media sales revenue.
- An agency that wants to push to a less-guaranteed-revenue model when working with inventory partners.
If you’re a DSP, SSP, brand or someone else in the space, you might get less out of this, but since we all touch PMPs in some way, it might be useful for you read.
What’s a PMP?
There are a number of definitions of what a PMP is online, my favorite one comes from Digital Ad Blog, which states that a PMP is “an invite-only marketplace where high-caliber publishers offer their ad inventory to a selected group of advertisers.”
Now, not every publisher that’s doing a PMP is “high-caliber,” but the gist is there—a PMP lets publishers sell their inventory programmatically through a relationship that’s different from the open auction.
Digital Ad Blog continues: “[T]he difference between a private marketplace and an open marketplace is that a private marketplace gives a publisher tighter control on which kinds of buyers, advertisers and creatives will displayed on their site… [T]ypically CPM’s are much more competitive in a PMP because premium advertisers are competing for the highest quality ad inventory on very reputable digital properties.”
That all makes sense, right?
Let’s say there’s a website called freemusicgroove.com with an enormous amount of data about what kind of music my audience is listening to. This information might be very valuable to advertisers, but is difficult to buy on the open exchange.
So the seller of that ad space can set up a private marketplace deal that makes that inventory plus data available to purchase. This way, both the buyer and seller win—the buyer gets access to premium ad placements unavailable before that will ideally perform better, and the publisher is able to make more premium inventory available at a higher price than they would get on the open exchange.
Types of PMPs
There was a point in time when buying on the open digital ad exchanges was an invitation to get your pocket picked. (Some might say it still is!) Domain spoofing, unviewable ads, and robotic impressions were the norm and not the exception. Several industry bigwigs, such as the late Ari Bluman, said that they wanted out of the open exchanges entirely.
Without the open exchanges, how were programmatic media traders expected to get inventory? Through PMPs.
There are four ways buyers can access inventory programmatically: Open Auction, Private Auction, Preferred Deal, and Programmatic Guaranteed.
Every SSP has their own nomenclature; I’m using the Google AdX terms here because it’s the most widely used SSP, but generally the revenue share terms are the same.
|Deal Type||SSP RevShare|
|Open Auction||85/15 (in favor of pub)|
Open Auction is standard RTB. A bid request is passed through the SSP, and (assuming that a DSP is sent this bid request) a DSP user can bid on it if the impression fits its campaign parameters. Open auction and open exchange are synonyms, and I use them in this guide interchangeably.
Google also has a product called “First Look” that allows publishers to give buyers an opportunity to win impressions before they hit the open auction. Most buyers in my experience are content to win an impression on the open auction, but this is aimed at selling to retargeters (e.g., Criteo or AdRoll) the $20-$30 CPM impressions that are lower in the sales funnel.
Private Auctions were first developed as a partnership on the buy and sell sides. Publishers had premium tiers of inventory that they wanted to package on the open exchanges; advertisers wanted to buy said inventory but didn’t want to sign guaranteed I/Os for them.
The thought went that if 10 or so buyers were all put into a “Private Auction” to buy this inventory (non-guaranteed—most all PMPs are non-guaranteed unless otherwise stated), then the collective competition on all of their bids would raise the total price of the asset.
And it worked! Sort of.
To set up these private auctions, new iterations of existing technologies were developed, and because it was a new feature, an increase of the revenue charge was included—usually 80/20 in favor of the publisher. The increase in CPMs was generally enough to cover the 20% cut the SSP was taking, but at the same time private auctions subtly admitted that open exchange inventory wasn’t all that good. This might have negatively impacted CPMs.
Preferred Deals are an outgrowth of private auctions. In a preferred deal, a non-guaranteed buyer can enter into an agreement with a seller saying that it will buy a certain subset of inventory for a flat-rate CPM. The CPM itself would be guaranteed, but the spend would not. This is different than the private auction, because typically there’s only one buyer on a preferred deal and there is only one price. Preferred deals generally have more favorable revshare terms: typically 85/15 in favor of the publisher.
Programmatic Guaranteed is sort of a weird hybrid between a traditional media sales campaign and programmatic buying. In a programmatic guaranteed deal, a publisher sets up a media sales campaign in their ad server; we’re talking all campaign parameters here: frequency capping, geotargeting, audience set up, inventory pools, etc. etc.
The buyer sets up the campaign in its own DSP with almost no targeting parameters—just the deal ID and the creatives. It’s basically just like a media sales campaign; the only difference is that no tags change hands.
So those are the deals that can be set up—what’s the reality on the ground? What are publishers and agencies actually
The truth is that with the exception of scarce, high-impact units such as pre-roll video or premium publishers advertisers with endemic advertisers, advertisers almost never want to do guaranteed deals. If they wanted to do that, they would have stuck with tags and I/Os. Getting locked into a guaranteed deal limits their flexibility and prevents them from optimizing the campaigns themselves.
That means that in practice, nearly all PMPs are set up as preferred deals or private auctions. Which in turn means that (and if you get anything out of this piece, it should be this) that publishers are going from guaranteed, I/O-based revenue—which is actual money in the pocket—to preferred deals, where publishers have no guarantees of revenue at all.
This, needless to say, is not a positive development for publishers.