Today, companies demand for more control, better brand safety, and better ad quality. Digital marketers are turning to private marketplaces (PMP) to fulfill this demand.
Based on the forecast of eMarketer, private marketplaces will surpass open exchanges in programmatic ad spending by the end of 2021. Advertisers and publishers are expected to spend almost $16 billion in private marketplaces this year compared to only $13.77 billion in open exchanges.
The private marketplace segment made a 38% leap from last year’s forecast of only $11.56 billion, behind $12.22 billion for open exchanges. This is a significant shift in ad spend. In this article, we’ll provide a brief overview of what private marketplaces are, how they’re different from other types of auctions, and how they benefit advertising businesses.
What Is Private Marketplace Advertising?
Private marketplace (PMP) advertising is the use of a private marketplace to buy or sell ads between exclusive parties. A PMP is a real-time bidding marketplace where publishers make their inventory available to select advertisers or buyers.
PMP advertising allows these publishers to invite advertisers of their choice and conduct a private auction of their ad inventory. Purchases are made programmatically with the price and access restrictions set by the publishers.
What Makes PMPs Different
To give you a background, advertisers have several ways of acquiring ad inventory using the real-time bidding ecosystem. Those are generally placed in three tiers or auction types. Each type has its own level of restrictions, costs, and benefits.
- Direct sales: Direct sale is done programmatically between one buyer and seller. This auction type provides guaranteed ad inventory. It enables the publisher to regulate the price and allows buyers to buy more premium inventory directly from publishers.
- Private marketplace: PMPs are invite-only auctions, where deals are traditionally made between one publisher and a select group of advertisers. The inventory being auctioned may include premium placements like homepage, sub-sections, etc. Fewer advertisers are bidding on the inventory in a PMP because of its by-invitation nature.
- Open market: This auction type is open to all publishers and advertisers. Everyone is eligible to participate in the buying of available inventory, and the highest bid wins.
Why Advertisers Prefer PMPs
Ad fraud is a serious problem many digital advertisers are facing. Estimated losses to ad fraud ranged from $5.8 billion to $42 billion in 2019 alone. Due to this, more advertisers are pulling their budgets from the open marketplace.
PMP advertising is becoming increasingly popular because it sits in the space between direct sales and the open market. It has the right number of restrictions and security while allowing fair competition. PMPs are considered the best of both worlds. Here are other benefits:
- PMPs enable ad publishers to maintain the efficiency of programmatic advertising without the risk. It also ensures that placements are always filled with quality ads from respected brands.
- Digital advertisers do not rely on humans to work with publishers or websites to broker deals. These transactions can be done using their demand-side platform.
- PMPs also provide advertisers the security of knowing whom they’re buying their ad inventory from. This helps increase brand safety.
- Advertisers are also able to get publisher data straight from the source, allowing them to make more informed decisions about their placements, formats, messaging, and more.
Why Businesses Should Consider PMPs
After looking into how PMPs work, it’s no surprise that many are attracted to their benefits. PMP advertising is an excellent way to maximize a digital advertiser’s premium impressions in an automated process.
Private marketplace advertising also adds efficiencies to the sales process, increases the ability to target specific audiences, and offers a means to evaluate and optimize.