What Does A PMP-First Programmatic Strategy Look Like?

rachelparkinThe Sell Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Rachel Parkin, senior vice president of strategy and sales at CafeMedia.

As header bidding takes off, the advantages of private marketplaces (PMPs) are multiplying. With a PMP-first approach, advertisers lean toward maximizing PMP volume before utilizing the open market.

In essence, it means choosing relationships over technology. Relationships go hand in hand with one-to-one management and optimization, giving buyers a publisher partner that has an equal stake in ensuring that the inventory sent over is designed to surpass its KPIs.

PMPs provide the safety net of knowing exactly who you’re dealing with, and the benefits of this are twofold. Advertisers get the certainty that they are actually buying impressions where they want – and not from someone masquerading as that site. In addition, they have the ability to pick up the phone and (gasp!) call an actual human on the publisher side. One-to-one contact is about more than just troubleshooting; it’s essential to accessing an inventory package tailored to an advertiser’s specific campaign goals – and maybe even preferential treatment at the top of the waterfall.

And transparency is the key to making PMP relationships successful. It all starts with buyers and sellers asking the right questions and sharing their goals for the campaign. Otherwise, a publisher is flying blind. The publisher can then package the best inventory together, in terms of placements, context or pricing for these goals. Putting a feedback loop in place, too, enables a publisher to make further refinements over the flight.

Prioritizing relationships also means that more of an advertiser’s investment goes toward working media. A PMP has a clearly defined ad-tech tax on both sides. The buyer knows the true bid that its demand-side platform submits on an impression. The seller captures the buyer’s true bid, adjusted for any supply-side platform fees, so more of the buyer’s payment actually funnels through to the publisher that delivers the impression.

Not all PMPs are created equal, though. In the past, PMPs may have occupied space at the middle or bottom of the waterfall, giving them access to only a small slice of the inventory pool that likely has lower viewability and engagement as well as more limited overlap with the audience that a buyer wants to reach. Header-bidding PMPs change that game, opening up significantly more scale and potentially the opportunity to handpick the exact impressions a buyer wants, without any repercussions from the publisher’s perspective, as the fill rate is 100%.

The Open Market

If PMPs are the golden ticket to premium programmatic, why has open market dominance persisted? Advertisers have grown accustomed to ridiculously low prices and still believe that the open market is the simplest way to scale audience buys.

Open market may play the right role for direct-response campaigns with measurable actions that can be optimized for. However, branding campaigns come with a different set of KPIs that are significantly harder to manage in RTB environments. Once buyers factor in losses for nonhuman traffic, fraud, brand safety and viewability – and the costs for paying vendors to scrub the open market for these factors – the net CPMs of the open market are much higher.

Unless advertisers are incredibly sophisticated about their approach to open market buys, PMPs offer the opportunity to make guarantees against those metrics and take the guesswork out of the equation.

Other Factors

The presence or loss of scale in the open market is entirely random. Even when holding a bidding strategy constant, access to specific supply sources that may have been previously available is out of the control of the buyer. Yes, supply is still fluid in a PMP. Yet a two-way dialogue opens up the possibility that a publisher can potentially prioritize a deal over other PMP buyers who may have higher prices or even direct deals to ensure more consistent scale.

There is also the issue with data overlays. The no. 1 reason why some buyers rely on open market strategies is that they are buying audiences using third-party segments or data in their data-management platform. In the past, buyers may have experienced cases where deals with audiences overlaid haven’t scaled. Yes, this can happen.

However, if an advertiser is running PMPs with publishers that are a good fit for its audience, then the real question is whether the audience is too narrowly defined. To the extent that buyers are looking more for demographics or context, they should consider whether a publisher can align its own first-party data with a PMP, to just as accurately reach the right users for the buyer’s in-demo goals. And, if the advertiser has a highly targeted group, is it bidding the right price to ensure that it always wins when there is an overlapping match?

Finally, there is ease for buyers. A buyer just needs to select a few inventory supply sources and it’s off to the races, right? But how much time is spent blocking and tackling to remove low quality sources from the pool?

Managing site lists is an endeavor in and of itself. The sites that often pop to the top are ones that would make any buyer cringe. Adding viewability to the mix makes optimizations that much more complicated, too. Yes, setting up multiple PMPs takes time to negotiate and deploy, for both advertisers and publishers. Advertisers may have to set up multiple supply sources or line items in the demand-side platform, but in doing so with a select group of larger publishers, advertisers can get programmatic access to highly viewable, brand-safe inventory at scale.

It’s not hard to put a toe into the PMP pool. Many publishers are willing to set up a test with no minimums, so that advertisers can see the benefits over the open market for themselves.

Follow CafeMedia (@CafeMedia) and AdExchanger (@adexchanger) on Twitter.

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