To understand how private marketplace advertising inventory is different from the open exchange, you need to understand the different tiers of auction types. There are several different ways of acquiring inventory in the real-time bidding (RTB) ecosystem.
Generally, these tiers, or auction types, include open market, private marketplace, and direct. Each of these auction types offers its unique benefits as well as access. As you traverse the different auction types, access will be more restricted, and costs will increase. Below is an overview of each tier and how it can be used.
The “traditional” and most widely used means of digital advertising through real-time bidding (RTB). In an open auction (open marketplace), inventory prices are decided in real-time through an auction, and any publishes or advertiser can participate. Essentially, publishers make their media inventory available in an ad exchange at a specific minimum cost per thousand (CPM) price and advertisers bid against one another for the available media that they desire. The highest bidder wins the impressions. If you are 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 is similar to open auction, except publishers restrict participation to selected advertisers only. Unlike open auctions, this private deal gives an exclusive group of advertisers priority to bid on the inventory before it becomes available in the open marketplace. In some cases, publishers may allow specific advertisers to apply for an invitation to participate in their private auction, and the publisher will decide their approval. Much like the open auction, publishers or ad exchanges can set a minimum CPM. Again, the highest bidder will win the impressions.
Programmatic Guaranteed, Programmatic Direct, or Preferred deal is an option that bypasses auctions completely. The 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. However, the only caveat here is if advertisers bid on preferred deal impressions, they are no longer eligible to bid on that same impression in the open auction.