Ask a Centro Expert: What’s a Private Marketplace?

Ask a Centro Expert is a blog series from Centro where we break down the complicated tools, tech, and trends you’ve been hearing about in the trade pubs and around the office. We reach out to some of our in-house experts to ask the tough questions and turn them into bite-sized Q&As for your reading pleasure. The last time you heard from us, we explored Connected TV. This month’s topic: Private marketplaces (PMPs). We talked to Christine Kim, Centro’s Director of Client Learning, for the break down.

What is a private marketplace?
Private marketplaces (PMPs) are customized, invitation-only RTB marketplaces where premium publishers make their inventory and audiences available to a select group of buyers. Usually a negotiation takes place between the buyer and seller to create and agree on a private deal.

This is different from an open marketplace, which is unreserved inventory with no or low rates – which allows a larger pool of users to access inventory.

How does a PMP negotiation work?
During this process, a Deal ID is provided by the publisher and given to the buyer – and it can be used to set up their PMP in a DSP. Deal IDs act as a key to the private marketplace. When a deal ID is negotiated, both parties are agreeing on two things: Approved access and a set of buying parameters like floor price and inventory type.

So there is no auction with a private marketplace?
While private marketplace transactions are still subject to an auction, the competition is limited to buyers who have been invited to partake in the auction.

What’s the difference between preferred deals and private marketplaces?
Preferred deals are a specific type of private marketplace that use fixed rates and include prioritization in the ad server (first-look). We’ve got a great analogy on our blog that might help clear this up even more. 

Are private exchanges and private marketplaces the same thing?
Private marketplaces and private exchanges can frequently be confused – likely because they both have the word “private” in them – but they’re two different concepts. We actually have another great analogy for this. Check it out.

Why would a buyer use PMPs instead of the open marketplace?
Using a PMP is a strategic decision. Sometimes it will make sense to add a PMP, and other times it won’t. That being said, here are few reasons:

1. You’ve already run a campaign and know which sites perform the best, so you can try expanding into your same target and test a PMP.
2. You have high-impact units or video where inventory is not as available in the open marketplace
3. The goal of the campaign is viewability
4. The advertiser is blocked in the open marketplace (like pharma or gambling)
5. You or the advertiser need to know where their ads are running at all times
6. There is a specific package you need from a publisher

When would you use a direct buy instead of a PMP?
The use cases for a direct buy vs. a PMP are very different. If you’re looking for a guaranteed buy or want 100% share of voice on the homepage, go with direct buy. Instances where you’d go with a PMP buy would be similar to the list above. Another reason to go with a PMP instead of programmatic direct? You’re not looking for guaranteed inventory, but something slightly better than what’s available on the open marketplace.

What’s the reason behind the growth of PMPs?
It’s important to first understand the history of PMPs before we explore the reasons behind its growth. After the digital industry embraced automated buying and RTB, it became apparent that programmatic was not without its faults. Advertisers found themselves worried about things like brand safety, viewability, inventory quality, data capabilities, and transparency. In order to alleviate those concerns, publishers began to offer premium inventory and page placements, high-impact ad units, and the usage of first-party data through PMPs.

The open marketplace and programmatic advertising has gotten a lot of bad press lately. Having more control over inventory and being in brand-safe environments has become increasingly important, and advertisers are responding by starting to shift to PMPs with even more frequency. In fact, according to Digiday, ESPN is reportedly spending 95% of their programmatic buys through PMPs.

If PMPs are considered brand-safe environments, does a PMP replace my need for brand protection and a blacklist?
Blacklists protect against purchasing specific domains, but often times the point of running on a PMP is that you typically already know where your ad is running and don’t need to protect against that. So, while you don’t necessarily need to use a blacklist, it’s also true that buying premium content does not always mean protection against the unique and specific brand safety concerns of each advertiser.

If you need to use a large blacklist with your deal, consider looking for a different deal or creating your own. But if you’re only looking to avoid a few domains, then layering in a small blacklist is OK. Brand safety contextual segments can be considered as well.

What’s next for PMPs?
Today, the most common form of digital media buying is a hybrid of programmatic and direct. PMPs have the potential to bridge that gap by taking the best of both worlds and giving advertisers and buyers what they want and need from a buy.

We can expect to see continued growth in PMPs – especially as technology makes it easier to implement them. According to the AMA, there’s been more growth in particular with Connected TV PMPs and mobile PMPs in the last six quarters.

Of course, header bidding has the potential to change all this – but we’ll have to stay tuned.

Looking for more info about PMPs? You’re in luck. On February 21, we’re hosting a webinar on PMPs and you’re invited. In the meantime, you can reach out to info@centro.net for more Centro resources that will help you understand private marketplaces.