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John Rogers is senior vice-president, media partnerships at Videology
Oh, Canada. Home of Ryan Gosling, amazing hockey players, Cadbury’s Crispy Crunch candy bar and, increasingly, private market places.
While all of these things are great, let’s focus on the latter.
Setting the stage
Much of traditional advertising technology was built for display, based on an RTB (real time bidding) system, which let advertisers bid on inventory through auctions called exchanges. This system worked fine for display and offered a way for media companies to monetize inventory left unsold from direct sales efforts. It worked because there was basically an unlimited amount of supply. As demand rose, so did display ad inventory—they simply made more.
With video advertising, that ‘unlimited supply’ situation is not the case.
Just as with TV, there’s a limited amount of quality video content available, and high demand to advertise against it. Both advertisers and suppliers understand the value of the sight, sound and motion video advertising experience.
It’s a win-win, but it also puts us in a dilemma.
Both suppliers and advertisers see the benefits of operational efficiencies and increased effectiveness of data-driven advertising technology, yet suppliers aren’t willing to risk commoditizing their precious video inventory in an environment that offers little transparency or control.
Enter PMPs.
The Rise in Private Marketplaces
Private marketplaces, or PMPs, are ‘invitation only’ programmatic marketplaces between buyers of media and sellers of media. In this situation, ‘programmatic’ means the use of technology to automate some level of an advertising transaction while also applying data to make that transaction more beneficial.
Generally, PMP marketplaces exist between leading advertisers and high-quality media brands that want greater control over who advertises on their properties, the kinds of creative that run, and pricing. A PMP can come in multiple flavors, but in Canada we most often see them between one single advertiser and one single media company.
PMPs have been particularly popular in video because high-quality, premium content is constrained, so media companies are reluctant to place their inventory into public exchanges.
So who’s using PMPs, and what’s the big advantage?
On the supply side, we’re seeing most every major inventory source scale their use of private marketplaces. Broadcasters, news portals, premium 1st party sites, news aggregators—they’re all seeing the value of leveraging technology to get the best yield from their inventory.
Similarly, on the demand side, we’ve seen major agencies, agency holding companies and brand-direct advertisers all embrace PMPs. It allows them to most effectively use the inventory they purchase to reach their target audience.
It makes sense for two reasons: decreased operational friction and data / technology application.
Let’s start with operational friction. In traditional deals, phone calls were made, prices were negotiated, plans were created, prices were renegotiated, plans were recreated—and that was all before a single ad was served, which means the technical integrations of the supplier and the advertiser often hadn’t even been considered.
Private marketplaces allow advertisers and suppliers to cut through many of these processes by leveraging a platform, which solves many of the manual, labor-intensive steps in launching a campaign. The platform does all the heavy lifting—allowing advertisers and sellers to focus on what’s most important to them—driving revenue.
The second value add for a PMP is the ability to apply data and technology to drive campaign efficiency. Advertising technology solutions’ biggest value is their algorithmic ability to make smarter decisions, faster. Once an advertiser and supplier have agreed to work together, they can leverage a PMP, through a technology platform, which allows them to apply data to campaigns, control pacing and frequency, and have a single-source for unified reporting across all of their campaigns.
To reiterate—this is not an RTB solution. This use of technology isn’t meant to make last-minute, bidded decisions. In fact, it’s quite the opposite. Relationships are still very important. The buyer and seller have to work together to come to agreed terms. At that point, the technology takes account of every variable in the advertising equation and then executes the best possible plan, within the parameters set by both parties, to achieve the best results.
What about TV?
Almost any transaction between a buyer and seller can benefit from the application of data and automation. It’s taking what already works and making it work better.
PMPs in the digital space actually operate in a very similar fashion to how a traditional TV model works. There’s an upfront agreement for a certain set of inventory to be used in an advertising campaign. The buyer and seller know exactly what they’re getting and giving.
Given PMPs’ ability to provide the same control as a traditional TV deal, it makes perfect sense for those groups to embrace the efficiencies offered from the use of programmatic.
TV has even more constrained inventory than digital video. For advertisers, it’s essential they’re guaranteed the inventory needed to accomplish marketing goals. For suppliers, it’s essential they sell all of their inventory or risk losing major profits. With a PMP, both parties can accomplish their goals, but in an even more efficient way, by optimizing the best use of this inventory.
We’re already seeing major brands in the U.S. (NBCU, AT&T) and Canada (Corus) begin to leverage technology for linear TV, and we expect that trend to continue.
Full transparency, full control, increased efficiency. It’s hard to argue against it.
