Understanding programmatic advertising deals


Programmatic Advertising is a concept that is foreign to many, and although it is rather in-depth, it is basically understood as the buying and selling of online advertising space. Essentially, advertisers that want to buy digital ad space and publishers who have the space to sell come together in online computerised transactions that ultimately will see the ad space being sold to the highest bidder.

Programmatic advertising takes this to a whole new level, incorporating four major ways in which this process can complete, and we highlight these below. It is extremely interesting to note that none of these approaches actually guarantee a purchase except the programmatic guarantee option, yet each is preferred for a different reason.

Open Auction

Open auctions are the oldest method of programmatic advertising. As with a normal auction, all marketers on the exchange can bid on all publisher inventories. This is real-time bidding, and the publisher sets the initial price although the final price is determined by the bidders. This did create a few challenges in terms of brand management as a result of publishers not knowing who they were selling to, and marketers not knowing who they were purchasing ad space from.

It has however been corrected with the help of IDs. Open auctions are affordable and offer the highest reach for campaigns. Publishers also have the opportunity of selling to a wider range of potential buyers.

Private Exchange

This is also a real-time bigging process, but the publisher has the upper hand in inviting advertisers to the auction. These hand-picked marketers are issued real-time ID’s, the publisher sets the price and the highest bidder wins. This has fast become the preferred method of dealing.

The Private Exchange offers a myriad of benefits in exclusivity, transparency, quality, profitability and automation, and, is most preferred for offering premium inventory to relevant marketers. Publishers also have the benefit of brand alignment with more control over the content on their sites.

Preferred Deal

This is a private exchange that involves a publisher offering a marketer premium inventory at a pre-negotiated fixed price. When the inventory is made available, a preferred marketer is able to bid at the pre-negotiated rate before it is opened to the real-time auction.

Publishers have the added benefit of selling their premium inventory at competitive rates, making this extremely profitable for them, while marketers are able to view inventory at fixed prices. This method offers increased opportunity and predictability in terms of brand management.

Programmatic Guarantee

This is similar to a direct sale, and the publisher offers the marketer specific inventory at a fixed price. Because the deal is automated, efficiency is improved and error is reduced. Programmatic Guarantee assures marketers of reliability in that they know a purchase is guaranteed, and transparency in knowing exactly where their ads will be placed.

Publishers on the other hand have control over the content to be displayed on their site. Additional benefits include quality and automation with the ease of a programmatic buy.

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