How to Maximize the Value of PMPs
Just like anything else in the industry, to make PMPs successful, all players have to strike a balance between competing demands. Publishers want to command the same high CPMs they do with direct sales, which gives some advertisers sticker shock given the lower CPMs they’ve been paying in public marketplace. While advertisers appreciate the transparency and control they have within the marketplace, if that control leads to cherry-picking from the top of a publisher’s audience, the publisher may see the advertiser passing on too many impressions and decide to cut that advertiser out of the marketplace.
Best Practices That Deliver Mutual Success
To achieve success with private marketplaces, you will need to rely on good communication and two-way transparency while setting clear expectations for rules of engagement up front. These sentiments were echoed in a recent post on AdExchanger by Brian Mikalis, SVP of Monetization at Pandora. Here are some specific actions buyers and sellers can take to set up deals that work and scale:
- Outline whether a first look or first right of refusal will be part of the deal.
- Determine what tier the buyer will compete in as part of the deal.
- Decide on a fixed or second price auction and if the bidding strategy will use a fixed or dynamic CPM.
- Talk about how the campaign will be targeted to avoid a problem with over-targeting and help the publisher structure the inventory to match targeting criteria.
- Discuss volumes and ensure that the projected volumes match the projected levels of spend. Publishers should bring reliable supply into the private marketplace. Likewise, advertisers should bring predictable demand or meet volume minimums.
- Set realistic price floors. Price floors in private exchanges are higher than the minimums often set in public marketplace as a counterbalance to the private nature of the exchange, where demand in intentionally limited.
A good example of a private marketplace deal using these best practices came to fruition during our PrograMatch event in July of last year when we made a connection between Zynga, the leading developer of the world’s most popular social games, and Geico, the second-largest private passenger auto insurance company in the US. Negotiating balanced terms of the arrangement upfront has been beneficial for both parties. The agreement allowed each party to achieve their key objectives while also reducing the amount of time and friction that would have been required to continually renegotiate terms. Six months after the original deal, both parties decided to extend the agreement for Q1 this year to continue on their shared path of success.
Zynga offered Geico a guaranteed volume of impressions on premium inventory, placing Geico in its top tier. In return, Geico provided Zynga higher CPMs and consistent spend. Mutually beneficial deals like this are the pinnacle of PMPs and offer a great case study that showcases using best practices to achieve success.
If you are looking for more opportunities to learn about private marketplaces, tune in next week for our Q&A with The Trade Desk.
Catch up on previous blog posts in our series on Private Marketplaces:
- What is a Private Marketplace?
- What Are Deal IDs and How Do I Use Them?
- Private Marketplace Best Practices
- Q&A with Leading DSP, The Trade Desk
Leah White, Senior Manager, Product Marketing