Understanding Programmatic Auctions

There are several different ways of acquiring inventory in the real-time bidding (RTB) ecosystem. The four main types of auctions include a preferred deal, private marketplace, open auction, and programmatic guaranteed. Each of these programmatic auction types offer their own unique benefits, so this guide will explain the differences between each type and help you choose the best one for your programmatic advertising strategy or in-app monetization plan.

Preferred Deal

A type of programmatic auction where publishers sell premium inventory at a fixed eCPM price to a selected number of advertisers, while entirely bypassing auctions. Advertisers are bidding in real time, either at or above the fixed eCPM price. Once an advertiser bids on an impression inside a preferred deal, they lose the right to bid again on that same impression in the open auction.

Private Marketplace, PMP Programmatic, or Private Auction

An invitation-only type of programmatic auction where a deal is traditionally made directly between a publisher and a selected group of advertisers, demand side platforms (DSP), ad networks, and/or agencies. Publishers have the freedom to set the minimum eCPM, like in the preferred deal scenario, and the highest bid wins.

Open Auction

Open auction is the official name for real-time bidding, and all publishers and advertisers are eligable to participate at the same time. Publishers offer their inventory at a specific minimum price, while advertisers bid for the available inventory. The highest bid wins. This is the most traditional form of programmatic auctions.

Programmatic Guaranteed, Guaranteed Buy, or Programmatic Direct

A guaranteed buy, also known as “programmatic direct” or “programmatic guaranteed,” is the direct sale of reserved ad inventory between a buyer and seller, with automation replacing the manual insertion order (IO) process. This type of auction allows the publisher to regulate the price of inventory to buyers. It also gives buyers the ability to transparently buy more premium inventory on a direct basis from the publisher.

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Programmatic Auction Type Cheat Sheet

Preferred Deal	Private Marketplace
Suitable for publishers with only one or a small list of selected buyers Providing advertisers access to exclusive, first-look inventory with steady volume with no unexpected price fluctuations Bypasses auctions, enabling publishers to sell their premium inventory to a select group of advertisers at their preference A controlled revenue stream for publishers	Suitable for publishers who want to do business with a selected group of advertisers, DSPs, ad networks, and/or agencies One of the safest channels for purchasing in-app traffic for advertisers Invitation-only
Open Auction	Programmatic Guaranteed
Suitable for publishers who do not have a preference for certain advertisers Can be the most cost-effective way of programmatic buying for advertisers, offering access to the largest audience Option for no fixed or floor prices	For publishers and a selected group of advertisers Advertisers agree on a predetermined fixed price for specific inventory, no price fluctuations Requires a more hands-on approach compared to other auction types, where publisher’s sales reps may be needed to negotiate deals directly with advertisers in advance Includes only one publisher at a time For inventory reserved only for programmatic direct buyers

How to Differentiate Programmatic Auction Types

Breakdown of Main Characteristics for Each Programmatic Auction Type

Type of Auction	Programmatic			Non-programmatic (Direct campaigns)
	Real-time bidding (RTB)		Programmatic Guaranteed, Guaranteed Buy, or Programmatic Direct
	Open Auction	Private Marketplace (PMP/Deal ID)
How is the price determined?	Auction	Auction and/or PMP terms	Pre-defined	Pre-defined
Do advertisers and publisher have a direct relationship?	No	Yes	Yes, to some extent	Yes
Inventory volume?	Non-guaranteed	Non-guaranteed	Guaranteed	Guaranteed
Type of inventory?	Percentage and type of inventory that the publisher decides to put on a public auction	Premium-only inventory	Percentage of premium inventory determined by a publisher Bulk inventory with robust targeting	All, including premium inventory Bulk inventory with limited targeting
Delivery type?	DSP/Through RTB pipes	DSP/Through RTB pipes with a Deal ID set	Programmatic direct platform integrated with the publisher’s ad server	Email/phone, manual ad tags entered in the publisher’s ad server

Prioritizing Different Types of Auctions in the Programmatic Ecosystem

Benefits of Each Programmatic Auction Type and How to Tell Which One Works Best for You

Programmatic guaranteed, PMPs, and preferred deals all ensure a higher level of brand safety for publishers and advertisers compared to open auctions. Advertisers know precisely in which type of environment their ads will appear, while publishers can be confident that their inventory won’t be flooded with low-quality ads. This also helps to prevent programmatic fraud. Furthermore, eCPMs are much more competitive in programmatic guaranteed, private marketplace, and preferred deals, compared to open auctions because premium advertisers are competing for the highest quality ad inventory.

In RTB, private marketplace, programmatic guaranteed, and preferred deals get the priority to bid on the impressions over an open auction. Participants in these auction types bid on an exclusive inventory that is out of reach for open-auction participants.

Benefits of Preferred Deals

Advertisers have the first look at the available inventory and at an agreed upon price that they wouldn’t normally have access to through open auctions.
Control over eCPM and improved yield on the publisher’s side, since they get to sell their premium inventory to advertisers at a more competitive price.
Cost-effective in terms of automation, as preferred deals are executed entirely programmatically, with no human interaction like in the case of programmatic direct buy.

Benefits of Private Marketplace

Transparency on both ends, with publishers and advertisers both having clear insight into what kind of inventory they are selling or buying, what eCPM needs to be paid, and the creatives that are running.
Publishers get to set specific eCPM floor prices for premium ad placements and net higher eCPM revenue compared to open auctions.
Advertisers can quickly and effectively set new buys live on top-tier websites or even packages of inventory on specific segmented verticals.
Becoming an industry standard, meaning that the private marketplace has already become available on many of the largest programmatic exchanges.
Managing campaigns directly with sales teams can be quite expensive and time-consuming. PMPs can potentially replace a sales team with technology and help optimize resources.

Benefits of Open Auctions

Can be the most cost-effective way for advertisers to buy media.
Provides the highest possible reach for campaigns, compared to all other auction types.
Offer a larger amount of what is called a “remnant inventory” that cannot be found in private marketplaces, guaranteed buys, or preferred deals.
Advertisers have the opportunity to bundle different curated inventory and audiences according to their specific needs and increase the effectiveness of their campaigns.

Benefits of Programmatic Guaranteed

Transparency of price and inventory type are some of the greatest benefits of this type of auction.
Advertisers can be confident their campaign will be displayed in a brand-safe environment, while publishers know exactly which creatives and how many impressions are to be served on their platform, giving them higher control over content that is displayed on their website.
Advertisers are guaranteed a premium inventory only.
Publishers have better insights and control over their inventory, which gives them the power to negotiate better prices based on the quality of their traffic.

Differentiating Programmatic Auction Types Cheat Sheet

A Guide to Understanding Programmatic Auctions