Private marketplace (PMP)

A private marketplace (PMP) is an auction with a limited audience of advertisers selected by the publisher. Private marketplaces offer more control in ad placement and typically offer prime placement.

What is a private marketplace (PMP)?

A private marketplace (PMP) offers selectable ad spots. PMP falls under the umbrella of real-time bidding (RTB), where publishers invite a limited group of advertisers to bid on top spots.

PMP deals can be mutually beneficial for both parties. It works well when publishers want to get top dollar for premium space, and advertisers want to place ads on premium space. 

These semi-exclusive spots allow more control and better quality for the advertiser, and allow them to selectively choose the inventory they want to bid on.

The RTB process gleans instant information about the user, and PMP includes information on the audience and their location, which allows advertisers to target specific audience segments with their ads.

For years, the open exchange has been the most common form of programmatic advertising. Yet, PMP has shifted into the primary spot as a more popular solution for ad spending in recent years.

What is a Deal ID?

Publisher ad servers generate a unique number called a Deal ID for each bid request. The buyer and seller share the number to help identify who is allowed in the auction or able to bid on a specific ad inventory. 

Setting negotiations for the Deal ID can be time-consuming and require extra steps. That said, they provide information on prior agreements that may have been arranged with preferred deals or programmatic guarantees. 

Not every preferred deal will use Deal IDs, as some will use tags. However, Deal IDs can contain a lot more information than a tag, and won’t slow the functionality of the page load or ad.

Using multiple Deal IDs, one impression can be entered into multiple PMPs and the results evaluated against each other. This is one way to increase the size of the PMP while still keeping it exclusive and off the open exchange.

How does a PMP work?

Even though PMPs are a subset of RTB, they are somewhere in-between programmatic and open auctions. The private marketplace removes the intermediaries from the programmatic advertising, which reduces the open-ended nature of the open auction —- by limiting the crowd.

There are no ad exchanges or supply-side platforms (SSPs) making the placements. Large sites with premium quality (like The New York Times or Wall Street Journal) typically offer PMPs, which provide clarity on where ad spaces exist and what inventory is on the docket.

Only advertisers invited with a Deal ID can gain access and participate in the PMP auction.

PMP benefits

Two of the major concerns for RTB are the potential for fraud and the lack of control over placement. 

A PMP, on the other hand, is a workable solution that came as a result. This kind of bid arrangement reduces the opportunity for fraud with set values and increased transparency. 

PMPs also offer increased control to advertisers and publishers in making sure campaigns are placed without the potential for insensitivity or awkward pairings.

This programmatic advertising is more efficient for advertisers when setting buys on top-tier websites. 

There is potential for PMP to replace expensive in-house direct-sales teams that typically spend human resources manually buying spots. 

Because of this, there is potential that the PMPs of the future will not be limited to the premium inventory and ads, and at some point, may scale to include mid-range publishers and include advertisers who aren’t looking for prime placement.

A PMP offers improved brand management, a considerable upside for top-tier publishers and advertisers. 

Using PMP, brands can control and protect their reputations with more meaningful ad placements, which means advertisers and publishers coordinate ads and avoid poor placement. Because of these benefits, PMPs are growing in popularity in recent years.

PMP drawbacks

In some cases, open exchange offers a better solution with a higher yield, while a PMP is on the pricier side and does not guarantee a captive audience. Because of that, advertisers may not be ready to pay for prime spots if they’re testing campaigns or just starting to ramp up their strategy.

Another aspect to consider, is that advertisers might not need to get the first placement for a premium price, and instead wait to bid in an RTB auction where they can get a lower price. 

Lastly, a PMP also takes more time and requires more manual interaction than an open exchange.

PMP vs. open auction (RTB)

Unlike the case of an open exchange (also called RTB or open auction), PMP deals come with a set floor price at a premium cost, which is usually worth it for the high-quality inventory and increased clarity on placement. 

There are also far fewer unknowns when buying a PMP placement. Any publisher can offer spots in the open exchange, and any advertiser can bid. With a PMP, however, publishers are clarified, and only select advertisers are invited to place a bid.

What are preferred deals?

With a preferred deal, the buyer is given the option to bid at a negotiated price, but the deal is not guaranteed. Inventory for these deals is not reserved for the buyer, and the publisher can reserve it with another buyer at a better price. Buyers also aren’t required to buy inventory in preferred deals.

PMP vs. programmatic guaranteed

A programmatic guaranteed deal provides fixed-price slots with a fixed number of guaranteed impressions. Auctions are still automated in demand-side platforms (DSPs) and SSPs.

While a PMP is designed to offer a degree of exclusivity, programmatic guarantees are even more exclusive. 

When publishers start to build relationships with advertisers, they often offer discounts and packaged deals to help bring them back in the future. In many cases, minimum bid prices and deal parameters are discussed between the participating parties before the Deal ID is even created.

The future of private marketplaces

Private marketplaces’ spending overtook programmatic advertising expenditure for the first time in 2020. Programmatic advertising spending hit a high in 2021 with a 41.2% increase in spending, and is expected to reach $123.22 billion in the U.S. alone, according to eMarketer

Experts expect PMPs to continue to gain a larger market share because of the improved control they offer for both advertisers and publishers. Addiotionally, continued concern for malware incidents in the open programmatic marketplace is another reason why PMPs have gained favor.

In 2021, The Media Trust reported a 64% increase in Q4 malware incidents compared to Q4 in 2020. In 2021, malicious redirects increased by 170%, and fake antivirus software update ads increased by 50%.

On the other hand, private marketplaces help reduce these threats. PMPs offer high viewability, engaged audiences, and fewer bot-influenced impressions. According to The Media Trust, top-tier publishers will continue pushing for data clarity and audience segmenting to outperform third-party cookies.

The issue will continue to lie in the middle segment of publishers and advertisers. 

  And if PMPs can find a solution for scaling, they may be able to pick up more of the middle ground — i.e. not too small and not too big publishers and advertisers — often left to programmatic advertising. 

Time and cost are top priorities that can make PMPs less than ideal for that middle segment.

Key takeaways

  • The private marketplace (PMP) is a subset of real-time bidding (RTB) that limits the advertisers allowed in the auction.
  • PMPs provide more clarity on which platforms offer ad space, so advertisers have more assurance of quality placement.
  • PMPs keep out much of the malicious advertising rampant in the open exchange.
  • PMPs can be slowed down by the deal-making process and often cost more because of the top-tier offerings.
  • Currently, PMPs haven’t been able to scale to meet the demands of the mid-level publishers and advertisers who prioritize cost and time.
  • PMPs continue to grow in popularity, overtaking programmatic spending in recent years.
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