The video advertising ecosystem has changed a lot over the last few years, including some of the core ways in which ads are transacted. On a macro level, the pendulum has swung between an open marketplace concept to more of a one-to-one relationship with publishers and media owners.
The reasons for the shifts vary year-to-year, but they largely hinge on increasing transparency and control for buyers, new regulations like recent consumer privacy laws, evolved standards, and brand safety measures to combat and stay ahead of fraudulent activity.
SpotX and industry-level insights on open vs. private marketplaces
As an industry we have embraced the re-emergence of private, one-to-one deals after several years where the open market dominated the buying ecosystem.
At SpotX, we have seen this trend first hand. In 2015, private marketplaces made up only 15 percent of transactions across desktop, mobile, and connected TV inventory. At the end of 2018, private marketplaces made up 67 percent of transactions. If we isolate connected TV inventory by itself, the prevalence of private marketplace transactions is even stronger. Connected TV shifted from 70 percent private marketplace in November of 2016 to 96 percent two years later.
Learn more: 2019 Video Advertising Trends
SpotX partners are not alone in this trend. In fact, eMarketer predicts that by 2020, more than $4 out of every $5 invested in programmatic advertising will go to either programmatic direct deals or private marketplaces.
Benefits of both open and private market spending
For desktop and mobile inventory specifically, the open market is very much alive and well. Given the ability to layer in tried-and-true third-party audience segments on open market buys, advertisers can gain exceptional reach amongst their target market by buying across many supply partners — upwards of 600 premium supply partners of which SpotX is directly integrated. The open market also, by nature, brings advertisers operational efficiencies because inventory can be bought across supply partners with a single tag. Furthermore, the open market is known to be cost effective due to the large amount of premium supply available on desktop and mobile devices.
Connected TV inventory, on the other hand, has been largely transacted via private marketplaces with a minimal amount of inventory in the open market. Given the size of the screen and the attention rates TV screens command, connected TV inventory mirrors traditional TV inventory from a cost and buyer-seller relationship perspective. Connected TV inventory is more expensive and thus highly coveted by media owners.
Connected TV also has the ability to layer in audience-level data, which is a developing opportunity with partnerships with companies like Tru Opik, Oracle Data Cloud, and clypd. In fact, audience-based campaigns on connected TV is a key differentiator and added value, causing buyers to shift budgets from traditional TV to connected TV.
Additionally, private marketplaces make more sense for connected TV transactions, as it is currently the best way to avoid “bad actors” or fraudulent players because there is an established relationship between buyers and sellers. Unlike desktop and mobile environments — which are VPAID-enabled and allow for brand safety measurement tools to be present — the connected TV ecosystem relies on other measures to safeguard transactions currently.
A challenge with a private marketplace-only strategy
While private marketplaces certainly have their place in the ecosystem, it is not without some challenges. One challenge buyers feel is the ability to layer in audience data without losing scale.
While audience targeting can and does occur within private marketplaces, layering data naturally narrows down and limits an advertiser’s ability to achieve scale. Whereas in the open market, applying an audience target across many supply partners is much more scalable. This is a challenge many buyers feel with a private marketplace-only strategy.
A solution to “open up” private marketplaces
In 2019, more media owners and advertisers will leverage technology to “open up” private marketplaces in a secure way. Through the use of SpotX Audience Lock, a data security product, as well as SpotX Audience Management Engine, we are working to enable partners to harness the power of first-party data, identify audiences across supply to create new partnership opportunities, and forecast against them. Please contact the SpotX Team for more information.
This article was written by Lynn Koves, specialist of Advanced Solutions Group at SpotX.