Due to its flexible nature and beneficial power for both publishers and advertisers, programmatic advertising is increasingly adopted yearly. Its automated algorithmic technology helps thousands of businesses buy and sell media, thus eliminating intermediaries and the long hurdle of traditional digital advertising methods.
The programmatic advertising market is projected to hit a staggering $100 billion mark by 2024. Not to mention that the latest studies suggest that by 2026, programmatic advertising will reach $725 billion worldwide.
Given these striking vital insights, we could say that programmatic advertising has become one of the most powerful tools within the advertising industry.
As such, this article explores the different types of programmatic advertising available, easing your journey of finding the best option for your business needs.
What Is Programmatic Advertising and How Does It Work?
In short, programmatic advertising uses software that caters to easily buying and selling ad spaces, removing the need to go through a long and burdensome process of requests for proposals, quotes, and negotiation.
Besides this, programmatic advertising brings data-driven decisions much more efficiently and faster. But you can learn more from our complete guide on Programmatic Advertising Platforms, discovering how you can choose your partner in crime in 2024.
So, moving along, let’s discover how many types of programmatic advertising exist and how to use them to your advantage.
The 4 Types of Programmatic Advertising Deals Explained
Programmatic advertising deals are split into 2 types: auction-based and programmatic direct. Let’s dive into each one.
1. Open Auction: Real-Time Bidding (RTB)
For those new to this advertising technology, RTB is an automated auction system used within the programmatic advertising ecosystem to buy and sell ad space. The auction is done in real-time, thus the name, and based on a per-impression basis.
Introduced in 2009, the Real-Time Bidding solution is the oldest and most popular programmatic ad auctioning method, which has come a long way and is projected to reach $33783.82 million by 2031.
The RTB auction process is done in a matter of seconds, and in contrast, each advertiser competes in a real-time auction, and the highest bidder wins and secures its ad on the website or application.
As a result, RTB benefits both advertisers to win the bid and get their ad up and running and publishers to get the most out of their available ad space.
Moreover, RTB facilitates the process for Demand-Side Platforms, which helps advertisers, and Supply-Side Platforms, which allows publishers and Ad Exchanges, giving the ability for SSPs (Supply Side Platforms) and DSPs (Demand Side Platforms) to transact on a publisher’s ad inventory.
Real-Time Bidding (RTB): Pros and Con
RTB helps advertisers quickly buy media space and offers more control over their target audiences, thus being more cost-efficient. On the other hand, it allows publishers to find the best demand sources based on latency, unique demand, bid rates, and ad space availability. As such, publishers have the upper hand on their inventory.
Real-Time Bidding Pros:
- Detailed Audience Targeting;
- Increased Financial Control;
- Real-Time Optimization.
Real-Time Bidding Cons:
- Lack of Content Control;
- Data Challenges through GDPR (General Data Protection Regulation) or CCPA.
As a result, without an RTB system and a robust SSP (Supply Side Platforms), many publishers struggle to monetize their ad spaces, especially when the market becomes increasingly competitive.
For example, a user-friendly platform that integrates the Open RTB protocol is Sevio Ad Manager. This SSP solution combines some of the most advanced technologies in an easy-to-use platform that caters to publishers’ needs, giving them more control over their inventory and offering easy-to-understand analytics to improve their revenue stream.
2. Private Auction: Private Marketplace (PMP)
Just as the name says, the Private Marketplace also uses a bidding system, yet only a few advertisers can participate, only if the publisher invites them.
As such, advertisers enter the PMP only on an invite-basis through a private auction, a private exchange, or an invitation-only auction, thus catering to more targeted deals.
The whole auction starts when a user visits a webpage with ad units, thus triggering the auction, which, just moments later, a DSP (Demand Side Platforms) holds their private auction along with a handful of pre-selected advertisers through deal IDs.
The publisher will set a floor price for its ad space, and whoever is the highest bidder wins and displays their ad to the users.
Private Marketplace (PMP): Pros and Cons
PMP’s pitfall is the transparency within an open auction, primarily since it only uses invitations. However, each party knows the other, increasing relevancy within content niches and target audiences.
Private Marketplace Pros:
- Access to Premium Ad Inventory;
- Brand Safety through Appropriate Content Niche;
- Better Target Audience;
- Direct Communication and Relationships;
- Higher ROI.
Private Marketplace Cons:
- Negotiation Skills Required;
- Less Transparency;
- Management Complexity.
One good example of a PMP could be Publift (which, even though at its core is an SSP, has many features specific to PMPs), which helps publishers get the most out of their ad space through instant access to pre-existing buyer deals and private auctions.
Moreover, as they advise, Publift will take care of anything that means setup, troubleshooting, and reporting for you so that you can have more time to get more premium ads, which, in turn, generate more revenue for you.
3. Preferred Deals (PD)
Preferred deals, just like the name, are when the publisher reserves its ad space for a particular advertiser, and they both enter into an agreement that benefits both parties, like within the PMPs (Private Marketplace). As a result, the advertiser gets the highest-performing inventory and the relevant audience for a predetermined price or CPM rate.
However, unlike others, this is one of those types of programmatic advertising that doesn’t guarantee the publisher that the advertisers will bid over the ad unit.
This programmatic arrangement starts when a user enters a website, and then an ad request is sent to the advertising network to be accepted or denied. The advertiser that got the first look can bid against the predetermined price (CPM) and optionally buy the ad space; thus, it is called non-guaranteed.
Preferred Deals (PD): Pros and Cons
You could think of preferred deals as the compromise between the open competition of RTB and the controlled medium of PMPs, but let’s see the pros and cons.
Preferred Deals Pros:
- More Control Compared to RTB;
- Access to Premium Inventory;
- Potentially Lower Cost Than PMPs.
Preferred Deals Cons:
- No Guaranteed Impressions;
- Management Effort.
Any robust SSP should offer you the option of choosing Preferred Deals; as such, you could select between Google Ad Manager, Sevio, or OpenX. However, it all comes down to each platform’s ease of use, as Google and OpenX are well known for offering a more tech and in-depth approach, compared to Sevio’s Ad Manager, which doesn’t require any technical knowledge.
4. Guaranteed Deals: Programmatic Guaranteed (PG)
You could say that programmatic guaranteeing is like traditional media purchasing. Yet, this programmatic advertising model uses AI (Artificial Intelligence) technology to automate the Request for Proposal, serving, and tracking of ads to facilitate the 1:1 negotiation between advertisers and publishers.
The transaction between both parties is simply done through a DSP; the advertiser agrees upon the publisher’s price, reserves the premium inventory, and publishes the ad on the advertiser’s part.
Programmatic Guaranteed (PG): Pros and Cons
PG offers a beneficial blend of the power of automation and the efficiency of programmatic advertising. However, it has some drawbacks, so let’s break them down.
Programmatic Guaranteed Pros:
- Premium Ad Inventory;
- Higher Transparency;
- Cost-Effectiveness;
- Better Revenue Prediction.
Programmatic Guaranteed Cons:
- Limited Ad Inventory;
- No Clear Benchmarks;
- Less Flexibility.
Similar to the Preferred Deals, any SSP or DSP could offer PG. For example, Adobe Experience League is one such platform that has Programmatic Guarantee capabilities.
RTB, PMP, PD, and PG Comparison
Real-Time Bidding vs. Programmatic Guaranteed
Since both are types of programmatic advertising deals, they are some of the most distinct by comparison.
As we know, RTB allows everyone to bid on available slots in the open auction, compared to the programmatic guarantee, which only allows certain advertisers to agree upon publishers’ specific ad placements.
Moreover, PG is the only type of programmatic that offers advertisers the option to reserve inventory for their ads to be shown on specific websites or apps. In contrast, in RTB, advertisers need to win the auction.
Private Marketplace vs. Programmatic Guaranteed
Often, Private Marketplace gets mistaken for Programmatic Guaranteed, but here’s the difference:
- PMP deals take place in a Real-Time Bidding system where only invited advertisers can access the marketplace.
- PG happens between two parties, and the inventory is reserved for the specific advertiser.
Programmatic Guaranteed vs. Preferred Deals
These two types are part of the programmatic direct, requiring 1:1 negotiation. Yet, the main difference is that one guarantees a done deal while the other doesn’t.
Preferred Deals offer increased flexibility for advertisers, who can bid on the ad inventory but aren’t obligated to buy it.
How to Choose the Right Programmatic Type for Your Needs
As there are four main types of programmatic advertising, choosing the right one for your business needs is highly recommended, but the process might be overwhelming.
Fear not; we are here to guide you in making the best possible decision regarding your business requirements and objectives.
Here are some key factors to consider before choosing your programmatic type:
1. Campaign Goals
Brand Awareness
If your business goal is to increase brand awareness, then Real-Time Bidding might be your solution, as its primary goal is to reach broad audiences and increase brand recognition.
Direct Targeting
If you want to reach a specific audience, you could laser tag them with the Private Marketplace. This programmatic type lets you target publishers with highly relevant audiences.
Premium Inventory and Brand Safety
Go with Programmatic Guaranteed if you aim to increase flexibility while having complete control over your ads.
2. Campaign Budget
Cost-Effective Reach
Real-Time Bidding (RTB) is known for offering cost-effective solutions while reaching a broader yet relevant audience.
Cost and Control
Preferred Deals (PD) offer businesses a middle ground between RTB’s open competition and PG’s impressions, leading PD to secure high-quality inventory at pre-negotiated rates.
Guaranteed Impressions
Programmatic Guaranteed (PG) can give you guaranteed impressions at a higher cost than other programmatic advertising types.
3. Target Audience
Open Target Audience
Real-Time Bidding (RTB) lets you target audiences based on demographics, interests, and consumer behavior. As a result, your business could reach a wider audience, increasing your brand reach.
High Precision Targeting
Private Marketplace is your business to-go for specific targeting, only reaching the audiences in line with your brand’s mission and vision.
Direct Negotiation
Programmatic Guaranteed (PG) allows your business to negotiate the collaboration terms directly, catering to tailored audiences for your unique needs.
Please remember that not a single programmatic type is universally ideal, as it all comes down to your campaign goals while cost-effectively reaching your target audience.
8 Ad Formats of Programmatic Advertising
As we’ve learned more about the possibilities and types of programmatic advertising, let’s briefly review the most common ad formats that can be used within the ad campaigns.
1. Display Ads
Display ads are probably the most used ad format, as they represent the visual billboards of a business, regardless of the niche. Moreover, they can be placed in the header, footer, and sidebar of the website and can be static or dynamic.
2. Rich Media Ads
Rich media ads are fun and fresh, offering interactivity rather than a simple format. This ad could boost user engagement, increasing interactivity and brand recognition.
3. Video Ads
Video ads are popular due to user’s entertaining way of consuming content, and are three main types:
- In-stream ads;
- Outstream ads;
- In-display ads;
4. Mobile Ads
Simply as the name says, this type of ad is specifically optimized for smartphones and tablets and can be banners or interstitial ads.
5. Native Ads
Native ads seamlessly integrate within the overall content of a website or application, mimicking the website.
6. Connected TV
Connected TV is an ad that uses a TV connection to support content streams, such as Apple TV, Xbox, and PlayStation.
7. Digital Out-of-Home
The digital DOOH ads use outdoor space for advertising brands in different formats, such as billboards, posters, kiosks, or street furniture.
8. In-Game Ads
The video game industry is expected to reach a market volume of $363.20 billion by 2027; there’s no wonder why in-game advertising is on the rise, too.
Given that more than 3.22 billion people play games worldwide, this is an excellent opportunity for brands to advertise their offerings easily.
This monetizing strategy can take multiple forms, from interstitial ads, native banners, contextual ads, rewarded video ads, playable ads, and advergaming.
Final Thoughts
As we’ve reached the end of this comprehensive guide, we could say that understanding the four main types of programmatic advertising deals is mandatory. As a result, your business could navigate a world filled with successful campaigns that align with your business goals.
Now, more than ever, it is time to embrace data-driven decisions while automating manual labor, thus unlocking the full potential of your business while elevating your marketing efforts.
So, are you ready to upgrade your marketing campaigns and take a journey towards higher revenue?
Was this helpful?
