The Case for Private Marketplaces How Publishers and Video Advertisers

Can (and Should) Embrace Private Marketplaces

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Introduction

Digital video advertising has changed, and at a breakneck pace. Consumers have learned to watch video in new ways — on desktop computers, smartphones, and tablets — and the market has exploded in turn. Digital video advertising has grown from a fledgling industry to one worth nearly $10 billion in 20141. For premium publishers and theadvertisers who buy from them, one of the biggest changes has been in how video inventory is bought and sold.

Using the traditional model, video ad inventory is bought directly from publishers through sales reps, and advertisers pay one price for a set number of impressions. A programmatic platform, on the other hand, automates the process, making it possible to buy ads on the single-impression level.

This means advertisers can be highly targeted in whom they reach, and how much they are willing to pay. In short, programmatic platforms make the buying and selling of video ads more efficient, measurable, and transparent — even at a much larger scale.

The Problem with Programmatic PremiumWhile advertisers are increasingly using programmatic platforms to manage non-premium buys, most “premium” inventory buys are still driven by direct relationships. Premium inventory is defined by each publisher as their most valuable inventory, and many publishers are hesitant to sell it in an open marketplace.

Why? Because in an open marketplace, publishers have less control over their pricing, and less control over which advertiser buys their inventory. They must sell inventory to the highest bidder — even if the ad is low-quality, or simply irrelevant to the publisher’s content. Publishers also fear losing control of pricing, which they closely manage to maximize revenue.

1 IAB, November 2014

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The Private Marketplace Solution

Private marketplaces offer publishers all of the benefits of programmatic buying, with control over the advertiser and pricing. That’s because, although they use programmatic technology, these marketplaces are not open marketplac-es. Instead, they are invitation-only, whether the invitation is issued by the publisher or the advertiser.

It’s important to note that private marketplaces can be set up in one of several ways. Pricing can be fixed or auc-tion-based, and inventory can either be reserved or unreserved. That said, we most frequently see marketplaces with reserved inventory and fixed prices. This type of private marketplace is often called “programmatic direct,” “program-matic guaranteed,” or “programmatic reserved.” This is the type of private marketplace we recommend advertisers and premium publishers pursue, and it’s also the type of private marketplace this ebook describes.

Private marketplaces offer publishers all of the benefits of programmatic buying, with control over the advertiser and pricing. Private marketplaces are becoming widespread, and they are transforming the premium video ad industry. The following pages will provide an overview and outline best practices, helping publishers and advertisers take full advantage of these powerful tools.

Pricing and Access

In private marketplaces using reserved inventory and fixed pricing, publishers have complete control over pricing and access. Rather than using auctions, inventory price is negotiated in the traditional way — between a publisher sales rep and an advertiser buyer, outside of the private marketplace. Publishers can set premium prices for their most valuable inventory; advertisers can set specific budgets for premium buys.

Publishers also control which inventory advertisers have access to, and can guarantee a specific number of impressions. When the deal is negotiated, the publisher may agree to reserve impressions which the advertiser must buy, or they may reserve impressions which the advertiser has the option to buy.

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Industry ForcastsWe’ve already seen a significant shift from manual to automated ad buying. Experts agree: the use of programmatic platforms to buy digital video ads will continue to rapidly grow. Magna Global estimates that US programmatic display ad spending (including banners, video, social, and mobile) will reach $17 billion in 2017. This forecast includes both premium inventory bought through private marketplaces, and non-premium inventory bought through real-time-bidding.

As shown above, Magna predicts that programmatic sales will largely overtake traditional direct-to-publisher trans-actions by 2017. Around 83% of digital advertising spending will occur through programmatic channels. 2

US Video, Social, Display, and Mobile Spending Share, by Type, 2011-2017

19%

18%

62%

11%

13%

76%

34%

29%

36%

28%

25%

47%

41%

32%

27%

47%

32%

21%

52%

31%

17%

RTB Non-RTB programmatic Nonprogrammatic

2011 2012 2013 2014 2015 2016 2017

2 eMarketer, December 2013

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The positive impact of programmatic has been tremendous, and our investment in programmatic has helped us benefit on a number of fronts: we have increased overall CPMs and revenue, automated our workflows, plus forged new and deeper relationships with advertisers and agencies operating in this channel.

- Chris Pirrone, General Manager, USA Today Sports

Short-form professional content from name-brand media companies — news clips from ABC News, sports highlights from the NFL, skits from Saturday Night Live — sells out rapidly, giving these media companies less incentive to test programmatic. The strong pull of this content makes it unlikely that a full RTB programmatic approach will emerge...Instead, private exchanges will emerge, allowing advertisers to use this content to complement their linear buys.

- How Software is Eating Video Ads and, Soon, TV, Forrester Research, February 2014.

Many large advertisers and agencies have goals to increase their use of programmatic. For example, globaladvertising holding company Interpublic Group (IPG) has a mandate to buy 50% of its media programmatically by 2016.3 According to a report by Forrester Research and the ANA, some 54% of advertisers have used programmatic platforms to buy media. Among the 46% who haven’t, 18.5% say they will in the coming year.4

With premium inventory, however, industry experts predict that premium publishers will look toward programmatic private marketplaces, rather than programmatic open marketplaces.

3 Media Daily News, July 20134 Ad Exchanger, March 2014

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Benefits & ConsiderationsHow Do Private Marketplaces Benefit Advertisers?Advertisers already manage a growing portion of their non-premium video ad buys on automated, programmatic platforms. Naturally, many advertisers are now considering automated platforms to manage high-value inventory. This allows advertisers to manage all of their ads in one place, and get the benefits of programmatic ad buying.

Here are the main advantages of private marketplaces for advertisers:

Audience targeting Using private marketplaces, advertisers can consolidate first- and third-party data to ensure each video ad buy reaches the right audience, at the right time, and on the right device. They can also see the video content their ads are run against, and exactly which audiences their ad reached.

Improved efficiencyAdvertisers can consolidate all of their video ad buys onto one programmatic platform, sequestering premium buys within private marketplaces. By using a single automated platform to make all video buys, advertisers can be more efficient, reduce complexity, and lower costs. They can plan a campaign just once against all of their consolidated supply — executing by campaign, instead of by publisher.

Global frequency capsIf your premium ads are managed manually, you can’t place frequency caps on your premium campaigns. These caps place limits on how often an audience is shown your ad — or multiple ads within a single campaign — even across multiple publishers. Without these caps, you risk overexposing your target audience.

Accurate measurementWe’ve already mentioned the single vantage point a platform provides, which simplifies overall insight and measurement. Private marketplaces also provide advanced analytics, giving advertisers a clear picture of campaign effectiveness. This makes it possible to measure impact, reach, unique viewers, effectiveness, and ROI across multiple inventory sources and campaigns.

Brand safety Reputable brands want to ensure their ads do not show up on low-quality sites or in questionable contexts. Private marketplaces can help assure advertisers that that their ads will only show up on agreed-upon sites. Purchases are made with complete transparency, as advertisers know exactly what inventory they’re buying.

A private marketplace provides unified programmatic access to both worlds – exclusive inventory and open marketplaces. The power of a private marketplace is that it allows us to begin to consolidate digital video buying onto one platform.

- Jim Kiszka, Sr. Manager, Paid Digital Media, Kellogg North America

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How Do Private Marketplaces Benefit Publishers?

Publishers also have a lot to gain from private marketplaces, and premium publishers are beginning to embrace these platforms. In the near future, these publishers will extend their use of private marketplaces based on growing advertiser demand.

Here are the main advantages of private marketplaces for publishers:

Brand control Publishers want to create positive consumer experiences with their content — and those experiences extends to any associated ad placement. That’s why, when it comes to their most valuable inventory, publishers want to sell only to reputable, high-quality brands. A private marketplace allows publishers to select the advertisers they invite into a deal, ensuring only high-quality advertisers have access to their premium inventory.

Greater pricing and revenue predictabilityIn the same way that publishers want to control consumer experiences of their premium content, they want to control price. In a private marketplace with fixed pricing and reserved inventory, publishers pre-negotiate the price of inventory. As a result, they can better predict how much revenue they will earn.

Advanced analyticsPrivate marketplaces can help supplement a publisher’s own research and analytics, making it even easier to see trends in advertiser demand, pricing, and preferences. Integrated with programmatic platforms for non-premium inventory, private marketplaces provide complementary analytics for all of your inventory (premium and non-premium), across all audience segments.

Simplified workflowsPrivate marketplaces allow publishers to automate the fulfillment of direct campaigns — rather than manually managing an IO (insertion order) for every campaign. This saves publishers time and money.

Customer satisfaction A growing number of advertisers are already using programmatic platforms for their standard video and display buys, and some of the most forward-thinking are eager to integrate premium buys as well. Publishers that offer their premium inventory via programmatic channels are evolving to meet the new demands of advertisers, and are creating a competitive advantage for themselves in the marketplace.

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For Advertisers:

What kind of specific controls does your platform create for the buy side?

How many of the top 100 publishers do you currently have relationships with via your marketplace?

What’s your process for onboarding publishers into a private marketplace?

Do you invite publishers to the private marketplaces on the advertiser’s behalf?

Can you onboard publishers not currently part of your larger programmatic marketplace?

Can you onboard publishers we do not currently buy from, but would like to?

Does your platform allow advertisers to consolidate premium and non-premium buys?

For Publishers:

What kind of specific controls does your platform create for the sell side?

How many of the top 100 advertisers buy inventory via your marketplace?

If my inventory goes unsold, what alternatives or safeguards can you offer?

What’s your process for onboarding advertisers into a private marketplace?

Do you invite advertisers to the private marketplaces on the publisher’s behalf?

Can you onboard advertisers not currently part of your larger programmatic exchange?

Can you onboard advertisers we do not currently sell to, but would like to?

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Seven Questions Advertisers Should Ask When Choosing a Private Marketplace

Advertisers and publishers should carefully evaluate programmatic platforms for their private marketplace needs. Having read this paper, here are seven questions to ask of any vendor.

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BrightRoll Private MarketplaceThe BrightRoll private marketplace solution is simple to implement for both advertisers and publishers. As part of the BrightRoll programmatic video advertising platform, private marketplaces require minimal technical setup and are fully hosted and managed by BrightRoll.

How Can I Get Started?To learn more about private marketplaces, reach out to your BrightRoll representative, or contact us to get started.

reports@brightroll.com | brightroll.comUnited States | Europe | CanadaCopyright ©2015 BrightRoll, Inc.

For more case studies, whitepapers and videos about BrightRoll andthe programmatic advertising space, please visit our resources page.

BrightRoll powers digital video advertising for the world’s largest brands, including 87 of the top 100 US advertisers and 18 of the top 20 advertising technology companies. The platform enables advertisers to reach 4 in 5 video viewers online and consistently ranks among the top two video ad platforms in

ads served. As a result, BrightRoll technology collects and analyzes hundreds of billions of data points monthly enabling real-time decisions that drive ROI for advertisers.

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PRIVATE MARKETPLACEof AdAge 10087

10largest DSPs

15,000websites

6,000mobile web & apps

100+leading video service partners in data, research, creative

services, and technology and infrastructure.

35/50of top publishers

Top 15agencies

18 of 20top ad networks