"On TV And Video" is a column exploring opportunities and challenges in programmatic TV and video.
Today’s column is written by Irfon Watkins, co-founder and CEO at Coull.
Private marketplaces (PMPs) are on the rise across programmatic video advertising. Some agencies and advertisers see them as a means to an end in solving issues of brand safety, viewability and fraud across publishers’ inventory. But could their growth be at the expense of the open marketplace?
In real-time bidded digital display advertising, a channel slightly ahead of video on the evolutionary curve, PMPs have risen from a 2% share of the market in 2012 to 23% in 2015, according to eMarketer. PMPs have taken their share from open exchanges, too, which dropped from 98% in 2013 to 77% in 2015.
This, along with alliances like Pangaea being formed by the world’s top digital publishers, suggests the growth of PMPs will continue. Data, however, could be the key to helping open exchanges maintain their market share.
The Exclusivity Benefit
Publishers benefit from building their own private marketplaces for video because of the control it affords. They are able to assign prices to categories and make a decision on which brands can bid on that specific inventory. It causes the publisher to have more of a say in the brands and products that are advertised on the site and its pages.
Exclusivity is another item that PMPs have in their favor. Across the world of commerce, there are examples of companies that are willing to pay a little bit more for a product none of their competitors can access. The same applies in programmatic advertising where the likes of Omnicom, Group M and VivaKi are happy to negotiate on the proviso they are given exclusivity on video inventory. Trust plays an important part here, too. These companies won’t deal with anyone whose inventory doesn’t satisfy their fraud, brand safety or viewability concerns.
The shortfall of PMPs in video advertising is reach. Open exchanges offer a vast pool of consumers for brands to show their creative. Open auctions provide access to a huge audience, which means advertisers can be picky about impressions and decide on the best for their campaign and its KPIs. It is estimated that more than 70 billion impressions flow into the open exchange through SpotXchange, Millennial Media, LiveRail and their ilk.
You could also criticize private marketplaces for being almost discriminatory toward the smaller publishers and advertisers unable to compete with their larger kin. The result is an uneven playing field, a two-tiered system where competition is divided. The very reason that PMPs exist is because brands demand quality in the inventory they are purchasing.
An Industry Of Inequality
Buying against cookies is no longer the most ideal strategy for advertisers. Unfortunately, there is not yet a viable alternative. Exchanges simply do not have enough data about the inventory they are selling to evolve beyond this cookie-based approach. Improving the availability of data and being able to provide detail on bids affords advertisers better consumer targeting. Content categories, for example, add context by helping brands place their creative with similar content. Data also allows advertisers to achieve and discern viewability, brand safety and fraudulent traffic information.
Brands are attracted to PMPs by the promise of rich data and packaged deals. But they sacrifice audience reach for quality and trust. By taking the best facets from both open exchanges and PMPs, it is possible to create a platform for ad buying that advertisers truly crave, because brands would love nothing more than to buy quality video inventory at scale.
PMPs have seen explosive uptake in the past. In order for exchanges to replicate these strides, they need to change their “information light” capabilities. If exchanges offer data on their inventory, then the tables will turn and it will be PMPs that receive a run for their money.