Differentiating Between Open Auction, Private Auction, & Preferred Deal in Programmatic Advertising

Programmatic advertising has become one of the fastest growing channels of digital marketing due to its inherent abundance of media inventory and buying efficiency. It offers multiple ways for mobile app advertisers to find the right media inventory for their ads. But with a few different ways to acquire media inventory programmatically, app advertisers are sometimes confused about which is the best way. To lessen the confusion, let’s shed some light on the differences between three different ways: open auction, private auction, and preferred deal.

November-02.jpgOpen Auction

In programmatic, open auction is the official term for real-time bidding (RTB). In an open auction, inventory prices are decided in real-time through an auction and any publishers or advertisers can participate. Generally, publishers place their media inventory in an ad exchange at a specific minimum cost per mille (CPM) price and advertisers bid against one another for the available media that they desired. The highest bidder wins the impressions.

If you’re looking for the most cost effective way to buy media with access to the largest audience, open auctions could be the way to go.

Private Auction

Private auction is very similar to an open auction, except publishers restrict participation to selected advertisers only. As the name suggests, this type of auction is invitation-only. In some cases, publishers may enable specific advertisers to apply for an invite to participate in private auctions. In short, advertisers can bid in the available media inventory only if they are invited to do so. Much like the open auction, advertisers or ad exchanges can set a minimum CPM for each advertiser. Again, highest bidder will win the impressions.

Preferred Deal

On the other hand, preferred deal is an option that bypasses auctions completely. Preferred deal makes it possible for publishers to sell their premium media inventory at a negotiated fixed CPM to selected advertisers. The deal is then transacted in real-time and advertisers will win the impressions by bidding at or above the fixed CPM price set by the publishers. Preferred deals provide publishers with a controlled and stable revenue stream through this secluded transaction environment. Meanwhile, advertisers benefit from the deal because it gives them access to more exclusive, first-look inventory with stable volume and no surprises on pricing. The only caveat here is, however, if advertisers bid on a preferred deal impressions, they are no longer eligible to bid on that same impression in the open auction

To sum it all up, open auction allows all publishers and buyers to bid in real-time. Private auction operates in the same way. However, participants include one publisher and multiple advertisers who have been invited to bid by the publisher. Lastly, preferred deal is a direct deal between publishers and advertisers at a negotiated fixed pricing. Your choice between the three different ways to buy programmatically should be dependent on your app marketing campaign goals.

Topics: Industry News