PMPs first started to gain popularity in 2011 and were heralded as the next big thing to hit the digital publishing industry. However, the almost simultaneous rise in popularity of programmatic ad buying forced most ad buyers to switch PMPs to the back burner.
As result, premium brands started switching to programmatic ad buying and publishers lagging behind the trend felt like they were missing out on better direct channel diversification and higher revenues.
Lurking in the shadows, PMPs were, apparently just waiting on an opportunity to make a comeback. GDPR, ad fraud, and brand safety concerns are just the opportunities and PMPs are making a comeback. However, in order to understand the relationship thew correlation between PMPs, GDPR, ad fraud, and brand safety we first need to understand what a PMP is and how it works.
So what is a private marketplace (PMP)?
A private marketplace is your own little auction house for ad views. The buyers competing for those views are ones you invite to join.
Private marketplaces or PMPs are like a members’ only club where members are served exclusive offers that are not offered to non-members. Just like other private membership clubs, the intimate setting generates trust and increases transparency on both sides.
Premium programmatic with PMPs is a kind of bridge. It fills the gap between resource-consuming direct deals (that don’t always yield the best CPMs possible) and open RTB exchanges (where publishers are not ready to offer their premium inventory).
If you work directly with ad-tech-savvy advertisers or DSPs (demand side platforms), it’s more than likely that they’ve already shown interest in programmatic buying of premium placements on your digital property. So you should probably get with the program(matic) — RTB is no longer just for your unsold inventory. It’s for premium inventory too.
Another reason to PMP your inventory is the fact that many premium advertisers and major brands are shifting their budgets to programmatic, and there’s a lot of demand for premium programmatic done right. Which is what you want to be doing.
In recent years, PMPs saw a decline in popularity because PMP implementation has always been considered unscalable. Less advertisers vying for your inventory meant that PMPs were usually placed at the bottom of a publisher’s ad inventory waterfall. But that all changed with growing adoption of header-bidding.
Header bidding is yet another buzzword being thrown around in the publishing and advertising communities. What it is (in a nutshell), is a piece of code that lets different demand sources compete for the ad view within your ad server even before the page loads.
Instead of a waterfall where demand sources compete sequentially, header bidding allows for a single unified auction that ultimately yields the highest revenue for the publisher.
Why is header bidding changing the way publishers look at PMPs?
Mostly because it allows for premium programmatic to compete much higher in the waterfall and bring in higher yield for publishers, at least in theory.
Before header bidding, programmatic was prioritized at the bottom of the waterfall. The reason was that publishers couldn’t know which impression a PMP wanted and which impression would be monetized with RTB on the open market at a much lower rate. And no one wants to peddle their best merchandise in the open market for pennies.
A good in-depth explanation can be found in this post on AdExchanger, but you can get the general idea from just looking at two different waterfall setups — one with header bidding, and one without.
A few years ago, a publisher waterfall would look kind of like this:
Without header bidding, even the First Look PMPs were pretty low in the cascade and direct deals were king.
With header bidding, the waterfall is inverted, and direct deals are actually lower than PMPs. If you’ve been looking for a reason to get your direct advertisers to switch to PMPs — this might just be it.
If it helps, you can think of it as a private art showing for select collectors before it is released to the general audience for bidding.
If this makes header bidding sound pretty awesome you first must realize that, at this time, header bidding is an expensive solution suited for very large publishers only. However, it is possible that in the near future, header bidding will be made more easily available to smaller publishers as well.
Is PMPing for YOU?
Well, first, you should be asking yourself a few important questions.
While cutting out the middleman does increase your yield, running a PMP has costs involved too. What this means is that you need more than just a well-defined niche audience for advertisers to target, but also enough traffic to make the investment in PMP worthwhile over time.
Ready for the challenge? Keep reading, there are more questions.
PMP Life Challenges
Nobody likes to pay the middleman for a job they believe they can do themselves. But cutting out this middleman comes with its own set of risks and hurdles.
Keeping everybody happy — What happens when a number of direct advertisers are after the same audience? How do you make sure your audience is happy with the ads and load speeds?
Data and reporting — How transparent do you want to be with your advertisers? Can you incorporate their own data into the campaigns they run on your properties? What is the criteria and methods for measuring campaign success?
Fill rates — <b>How can you maintain a high enough fill rate for a PMP?</b> ROI — What is the criteria for the success of a PMP deployment? What are the initial costs and the upkeep? Will the additional revenue be worth it?
Trust — Direct relationships between advertisers and publishers are great, but trust is hard to come by. Does the middleman currently supply this rare and valuable trust? <b>What would it cost you if you lost it (trust) and had to build it from scratch?</b>
Getting it RIGHT
So now that you have a pretty good idea of what PMPs are and what the challenges in maintaining one are — let’s discuss how a PMP strategy should look in 2016. Those of you already experienced with private premium programmatic — let your scrolling finger rest and re-focus your pupils.
1 — Don’t fire your direct sales team (yet)
One of the major advantages of a private marketplace is the reduction in overhead when it comes to managing client campaigns and accounts. However, if you want to keep your premium advertisers around, you need to make them feel cared for.
So it’s important they have a number to call or email to write to when they make changes to their campaigns or have questions or issues. In addition, growing your private marketplace can help boost revenues from classic direct sales. The advertisers you have close relationships with will have to compete with the PMP deals, and it’s up to you how much of a discount you want to give them over others in your waterfall.
2 — Work with the right partners and technologies
Your SSP account manager is your best friend. He (or she) can help you setup your first PMP deals correctly for everyone’s satisfaction. They can help you package and segment your inventory based on historical performance or advertiser campaigns, and can offer you a list of integrated DSPs.
It’s crucial that you select the technologies most suitable for your business and your premium advertisers. You need to combine technological solutions that offer an efficient way to access demand, and a decision engine to prioritize deals for optimal revenue and fill rate.
3 — Understanding and packaging your inventory
The first part of understanding your inventory is understanding your audience, their interests and responsiveness to ads. Having well-defined segments you can offer your advertisers will clearly influence their decision to pay for the attention of specific audiences.
Once you understand what you have to offer, and can communicate it to advertisers, you want to make sure it’s bringing you the most earnings it possibly can. Remember that dream all publishers dream? Well, that. To make the most yield from your inventory, you need to diversify and structure your pricing and waterfall accordingly.
Decide if you’re going to allow Deal ID, if you prefer fixed price auctions or second price, and which demand channels get First Look, and at what (all inventory or just uncommitted views).
Don’t forget to take into account all the components of the package like reporting, floor prices, flight times, targeted devices, segments and specific placements on your digital properties.
4 — Transparency levels and data sharing
The first PMP challenge I noted above is keeping everyone happy. In that aspect, transparency and cooperation with your demand channels is key to successful and mutually beneficial long term relationships. But keep in mind that transparency is a two-edged sword.
You don’t necessarily want to share all the information about your traffic and competing advertisers. Advertisers might also be reluctant to show their cards. But trust and cooperation is the engine powering the PMP machine.
To help your advertisers’ campaign performance and get them coming back with larger budgets you must ask a lot of questions. Answers to these questions will help create an effective process of inventory packaging for select clients.
What is the target audience of this advertiser? What is their budget and what inventory can you offer them for maximal yield for you and best performance for them? What creatives, products or brands will be offered to your beloved audience? Your in-depth familiarity with your content consumers can go a long way in helping you and the advertiser in building effective campaigns that will keep the audience happy, too.
5 — Communicate, experiment and optimize
Some questions you ask yourself and your PMP deal partner cannot be answered precisely. You can’t foresee how your audience will react to a certain ad, brand or call to action. So the only way to answer these is to test before you commit.
Run a demo with small budgets, audiences and campaign lengths. This won’t only help your partner feel more secure, but will help with optimizing the campaign to the satisfaction of both sides.
Even if you do have answers to all the above questions when setting up a PMP deal, it’s not enough. Things change. New advertisers are added to your waterfall, new inventory placements become available or can be made available for advertisers. On the demand side, campaigns can change in terms of goals, creatives and budgets. Remember that sales team we told you not to fire?
Make sure they work with your clients — your advertisers — on optimizing their efforts to surpass their KPIs.
PMP deals and private marketplaces are the best way to dip your toes into premium RTB. And not just for you — for advertisers as well. Odds are your competitors are already running PMP deals with their supply channels, so you should be as well.
Have any tips to add? That’s what the comment section is for! We’ll be happy to learn from your experience in setting up and running PMP deals.