Programmatic advertising is widely accepted to refer to the automated buying and selling of digital ads. But within the umbrella term there are a variety of ways to transact. Here we delve into the detail of the four types of programmatic deals and look at when it’s optimum to use each one.
Programmatic advertising: What’s the deal?
It’s estimated that 82.21% of all digital advertising will be programmatic in 2024, while 2026 will see $726 billion spent on programmatic advertising, with this rising to $779 by 2028.
Clearly programmatic is, well, a big deal.
As well as automation streamlining the digital ad trading process to make it more efficient, programmatic introduces a layer of intelligence. Targeting is more effective thanks to demographic and behavioral data, while data-driven decision-making optimizes campaigns in real time, thereby improving performance. Overall transparency is enhanced because buyers and sellers can see which inventory is bought and sold and for how much.
Initially, there was only one option for the transaction and advertisers wanting to purchase their ads programmatically had to buy in bulk. But the blanket value that this assumes for ad space didn’t account for the different values and functions of different inventory.
Programmatic deals were developed to introduce more flexibility and control into the media trading process. Advertisers can tailor it to better meet the objectives of a campaign and publishers can ensure they are maximizing returns on their inventory.
Programmatic deals: Four ways of trading
Within the programmatic ecosystem, there are now four main types of programmatic transactions: the open auction, Private Marketplace (PMP), Preferred Deals (PD), and Programmatic Guaranteed (PG).
1. Open AuctionOpen auction is also referred to as real-time bidding (RTB), open exchange (OX), and open marketplace. The backbone of programmatic advertising, open auction—as the name implies—involves an auction process that is accessible to all advertisers. And while it’s not technically a pre-negotiated deal like Preferred Deals or Programmatic Guaranteed, it remains a core element of the programmatic supply chain.
Publishers put part of their inventory on the open market, where it becomes available for all buying partners to bid on.
Publishers can choose the ad units they want to put in the open auction, as well as the lowest amount (the floor price) they will accept for this inventory. Quick to set up, this type of trading is simple for both buyers and sellers. It’s an efficient way for publishers to fill their inventory—making it a good option for remnant—and cost-effective for marketers buying media.
On the downside, there is a risk of data leakage because it is made widely available via the bidstream. Units can also remain unsold, while the large supply of impressions can result in low CPMs for publishers. The open nature of the marketplace also makes it vulnerable to fraud in the form of malicious ads.
Open auction trading is typically given the lowest priority when ad servers determine how to handle programmatic deals.
2. Private Marketplace (PMP)PMPs, a.k.a. closed auctions, private auctions, and invitation-only auctions, also adopt RTB but inventory is only available to buyers invited by publishers. The Deal ID, a unique identifier in the bidstream for both seller and buyer, is used to show that pre-agreed terms have been met, thereby ensuring transparency. Ad servers prioritize PMPs above open auctions.
PMPs are safer than the open auction because inventory (which is labelled premium) is only made available to trusted demand partners. Publishers therefore have full control over who can buy their top-tier placements, while advertisers have access to premium ad slots, which they can leverage to align their brands and undertake contextual advertising, ultimately delivering a positive user experience, which works in favor of all parties.
The premium nature of the inventory, along with publishers having control over auction floor prices, lead to higher CPMs. And the direct relationship between the publisher and advertiser means the terms of the programmatic deal can be more easily negotiated according to the requirements of each, as well as reduce the risk of fraud.
However, on the minus side, there is a chance that, without adequate information about a buyer, the publisher may miss potentially suitable advertisers. And advertisers will only pay a good price if they perceive the inventory to be premium enough for their goals.
3. Preferred DealsPreferred Deals (PD), also known as unreserved fixed rate, allow a buyer to review inventory which matches their criteria before deciding to purchase it at a pre-negotiated fixed price. In this setup, the buyer gets first-look access to a publisher’s placements before the inventory is made available to others in a Private Marketplace (PMP) auction or open auction, but the inventory is not exclusively reserved for them unless purchased.
Categorized as programmatic direct, Preferred Deals don’t operate on an auction basis and come above both PMPs and open auctions in the ad server priority list.
Unlike Programmatic Guaranteed (covered below), the number of impressions that will be bought or sold is not fixed. However, the audience is guaranteed. Ads are shown to specific target audiences which buyers can enrich with DSP data, along with the publisher’s prerogative to review and approve campaign creatives in advance. This makes ads highly relevant to the website’s visitors.
Preferred Deals offer predictability for both sides, with publishers benefiting from more stable revenue and buyers locking in a fixed price. They also ensure relevancy, as publishers can select specific buyers and advertisers can target the exact ad slots that align with their goals. Beyond the transactional benefits, these deals provide a chance for publishers and advertisers to build stronger relationships by negotiating directly and ensuring they’re a good match—without any obligation to buy or sell.
The case against Preferred Deals includes the scenario that inventory will end up in an open auction if the buyer cancels the deal, which they can do at any time. Also, less competition can result in impressions generating lower prices for publishers.
4. Programmatic Guaranteed
Given the highest priority by ad servers, Programmatic Guaranteed, automated guaranteed, programmatic direct, programmatic premium and programmatic reserved all amount to the same thing. That is, the publisher sells a guaranteed number of impressions to one buyer, with the price negotiated and fixed in advance by the two parties. Essentially, manual insertion orders (IOs) are replaced with the efficiency of programmatic trading, which also removes human error.
As with Preferred Deals, these fall into the programmatic direct category and don’t involve an auction.
Buyers see all the publisher’s placements and choose what they want to buy (in contrast to manual direct deals, when publishers only offer the select inventory they want to sell).
Programmatic Guaranteed is an effective way for a publisher to see good returns from premium inventory, negotiate better prices using insights on traffic data, and benefit from the impact of guaranteed revenue.
In Programmatic Guaranteed deals, publishers can review creatives before the agreement is finalized to ensure they align with their brand. Marketers gain access to premium, restricted-supply inventory at a fixed rate—such as key tentpole events like the Olympics—or strategic formats like Connected TV (CTV), which are often sold primarily through Programmatic Guaranteed deals. This approach gives advertisers the certainty they need when targeting high-demand placements.
Negatives include publishers underselling their inventory because it can be difficult to know in advance how accurately their premium placements meet the buyer’s targeting requirements. In addition, while automation is a core element of Programmatic Guaranteed, ad ops resources are typically needed to ensure campaigns run as intended.
Simplifying programmatic deal management
The types of deals described above provide publishers with different ways to trade impressions, based on the type of inventory and its value and availability. On the other side of the media trading net, programmatic deals offer advertisers a choice when it comes to buying the right placements at the right price for each element of their campaigns.
But the growing popularity of programmatic deals—meaning more advertisers are trading this way and more supply packages being made available—can make the landscape time-consuming to navigate.
BidSwitch enables all buyers and sellers connected to the platform to share, manage, discover, and optimize programmatic deals at scale, with the goal of ensuring that deal trading is as efficient as possible. This includes bulk management for mass uploading and downloading of deals, status monitoring to identify those that need troubleshooting, and reporting to track performance. The platform also offers the ability to discover new deals from connected partners, giving buyers and sellers broader access to relevant inventory opportunities.
The tools aim to reduce the complexity for DSPs so that it is easy to find new, relevant deals, and help SSPs showcase their supply packages by giving greater visibility, thereby maximizing the likelihood of them being seen and activated.
More details on the BidSwitch Deals Center suite of tools, including Deals Management and Deals Discovery are available here.
To learn more about optimizing and managing deals so that they meet your objectives, contact your BidSwitch account manager or get in touch with the BidSwitch team today.