Blog Programmatic Sales Models

Programmatic Sales Models

We continue to involve you in the world of programmatic ad and in this article we will consider programmatic sales models of advertising impressions.

Actually, there are two types of programmatic sales models, each of which is subdivided into two types as well. You can look at the scheme below.

The first question to ask is: is inventory purchased through an auction system? If “yes”, then you are dealing with an RTB auction. It can be of two types - Open Exchange and Private Marketplace. And now more about each of them.

Open Exchange

Open Exchange is a real-time bidding model, where any Publisher and Advertiser can participate while prices are determined in real-time. To participate in such an auction, it is enough to connect to Ad Exchange.

There are two types of auctions: prices up and prices down. In accordance with the rules of auctions of the first type, the lot is received by the one who made the highest bid. In auctions of the second type, the winner is the first who agreed to pay the declared value of the lot. The Second-Price Auction Model takes place here in order to maintain the balance of supply and demand. The auction of the second price occurs with an increase. The lot is won by the one who made the highest bid, the winner of the online auction. However, the sale price is not equal to his bid, as in classic auctions, but the sum of the second bid and a predetermined minimum margin. In RTB, this margin is 1 cent.

Private Marketplace

Private Marketplace is a similar model to the Open Auction, except for the access which Publishers set for only selected Advertisers; while other buyers do not even see this. In private auctions, publishers can separate some of their inventory and sell it to a selected buyer or group of buyers at a special price. Prices and entry conditions are formed by participants or owners of sites.

Programmatic Direct

If we go back to the first question “Is inventory purchased through the auction system?”, then in Programmatic Direct we will have a negative answer. In general, these are direct sales of placements.

With this type of collaboration, programmatic technologies can be tested without losing the direct collaboration with publishers that many advertisers are used to. There is no need for "manual" transactions with long approvals and price discussions.

Programmatic Direct is chosen by companies that want to focus on brand safety and seek premium placement both on sites of their choice and in publisher apps. It is only through direct purchases that advertisers can find the desired advertising platforms, where it is not possible to advertise through an open auction.

Programmatic Direct is subdivided into Programmatic Guaranteed and Preferred Deal.

Programmatic Guaranteed

Programmatic Guaranteed is a model in which both the price and the volume of impressions are fixed and known by both sides, i.e. Publisher and Advertiser, while the transaction takes place in a programmatic infrastructure. Programmatic Guaranteed is a form of direct selling.

Programmatic Guaranteed Deals allow you to buy directly from publishers. This model makes it possible to agree in advance and get the necessary audience, but it also affects the final costs, as the CPM is usually higher here than in RTB.

Preferred Deal

Preferred Deal is a fixed-price transaction without a guaranteed number of impressions. The invitation fixes the price, inventory (sites and sections), formats, audience segments and other parameters agreed between Advertiser and Publisher. 

Key Feature is that buyers get exclusive access and the benefits of being the first to see inventory before it goes up for an auction.

As a rule, publishers with high traffic and a relevant audience choose priority deals.

For example:

Nowadays there is a good variety of programmatic sales models, but one of the most common and effective is the RTB open auction in terms of price / quality ratio.

Despite the fact that at present one of the most common models is the RTB model, there is a prediction that in the next few years there will be an increase in the number of transactions made through Programmatic Direct as this type retains the possibility of close and direct interaction between the publisher and the advertiser.

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