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Underscore Opinion: Why the Shift to Private Marketplaces in Programmatic Advertising?

The shift to private marketplaces is a sign of the continuing evolution of programmatic advertising. As advertisers look for more effective ways to target and reach their audiences and publishers look for ways to align better advertising with their content, the value of private marketplaces (PMPs) has risen. Unlike the open exchange, where everyone with a budget has an opportunity to bid on inventory, PMPs are curated and a bit more refined than the open exchange. Think of it in terms of having a meal out; Outback vs. Ruth Chris. One could argue that you will enjoy a good meal at either restaurant, but the Ruth Chris experience is a little more refined, a more bespoke experience for a more discerning customer. So it goes when considering open exchanges or private marketplaces.

PMPs typically drive higher CPM prices, in part because the curated sites represent premium inventory, the Mandarin Orientals of the world (yup, now I’ve moved to travel for the analogy). Open exchanges are more like Marriotts, ubiquitous and everywhere, a good experience where the room is clean and the service acceptable. From time-to-time, you may run into issues, but those tend to be isolated. However, at Mandarin Oriental, you NEVER run into issues; it’s just not done. That is the major difference between PMPs and open exchanges; although not rampant, it is more likely to run into an issue with brand safety, inability to apply targeting properly or bot traffic on the open exchange than in a PMP. Why? Because the open exchange is serving a much wider swath of the population. It includes the long tail of the internet and lower volume sites that are aggregated to improve scale.

As we see more inventory shift to PMPs, where does that leave the open exchange? It’s not going anywhere! There will be some advertisers, due to budget constraints or scale requirements, who will need to run across both the open exchange and PMPs to reach there goals. The open exchange is also still a large amount of inventory. Because programmatic covers 99% of websites and follows user journeys, there is value in some of those long tail, less premium sites. Although the sites may be obscure, they may just be incredibly niche, but valuable or a significant part of your target’s journey.

The most effective way to test what works for your brand? Test it! Start adding PMPs to your programmatic buying process and understand the impact on costs and KPIs as you shift budget. Because private marketplaces add an additional security layer to your programmatic buys, following the market shift, while also ensuring that success is not impacted is critical. Shifting slowly while gathering learnings will make the shift less painful. Just remember the cost – hotel analogy here. 41 Mandarins in the world, 6900 Marriotts; exclusivity has a cost, so the ROI has to support it.

An Opinion Piece Written by

Erica Hawthorne, Director, Programmatic

Underscore Marketing, LLC

Erica Hawthorne, Director of Programmatic Media, has been working as a digital marketing professional for 18 years. She has experience creating and managing multi-channel marketing strategies, including creative & content development and media planning. Erica is effective at creating and facilitating marketing campaigns for multi-nationals with multiple brands and target markets.

At Underscore she manages the campaigns for Novocure, Bioventus, Kite, Sun, and Sarpeta. Scheduled to launch soon are Salonpas and Rytary

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