Due to its flexibility and its benefits for both publishers and advertisers, programmatic advertising is increasingly adopted each year. As a result, the market is projected to hit a staggering $725B worldwide by 2026.
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 various types of programmatic advertising available, making your journey to find the best option for your business needs easier.
What Is Programmatic Advertising? A Quick Refresher
Programmatic advertising is the automated buying and selling of ad inventory through real-time auctions and direct, pre-negotiated agreements. We go deeper into how that process actually works elsewhere, so we won’t repeat it all here.
What matters for this guide is that “programmatic” isn’t one single transaction type. Publishers and advertisers can choose between an open auction, an invite-only marketplace, or a fixed, no-auction agreement, and which one you pick changes your pricing, control, and guarantees significantly. That’s the real decision this guide walks through.
The 4 Types of Programmatic Advertising Deals Explained
Programmatic advertising deals are divided into two types: auction-based and programmatic direct. Let’s examine each type.
1. Open Auction: Real-Time Bidding (RTB)
For those new to the advertising technology, RTB is an automated auction system used within the programmatic advertising ecosystem to buy and sell ad space. The auction is conducted in real-time, hence the name, and is based on a per-impression basis.
The Real-Time Bidding solution is the oldest and most popular programmatic ad auction method, having come a long way and projected to reach $33783.82 million by 2031.
The RTB auction process is completed in a matter of seconds. In contrast, each advertiser competes in a real-time auction, and the highest bidder wins, securing their ad on the website or application.
As a result, RTB benefits both advertisers by enabling them to win the bid and get their ad up and running, and publishers by allowing them to maximize the value of their available ad space.
Moreover, RTB facilitates the process for DSPs, which helps advertisers, and for SSPs, which allow publishers and Ad Exchanges, giving SSPs and DSPs the ability to transact on a publisher’s ad inventory.
Real-Time Bidding: Pros and Cons
RTB helps advertisers quickly buy media space and offers greater control over their target audiences, making it more cost-efficient. On the other hand, it enables publishers to identify the most effective 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, many publishers struggle to monetize their ad spaces, especially when the market becomes increasingly competitive.
For example, Sevio Ad Manager is a user-friendly platform that integrates the Open RTB protocol. This SSP solution combines some of the most advanced technologies into an easy-to-use programmatic platform that meets publishers’ needs. It gives them more control over their inventory and offers easy-to-understand analytics to improve their revenue stream.
2. Private Auction: Private Marketplace (PMP)
As the name suggests, the Private Marketplace also uses a bidding system. However, only a select few advertisers can participate, and only if the publisher extends an invitation. As such, advertisers enter the PMP only on an invite-only basis through a private auction, a private exchange, or an invitation-only auction, thereby enabling more targeted deals.
The entire auction process begins when a user visits a webpage with ad units, triggering the auction. A few moments later, a DSP conducts its private auction, involving a handful of pre-selected advertisers through deal IDs.
The publisher sets a floor price for its ad space, and the highest bidder wins, with their ad displayed to users.
Private Marketplace (PMP): Pros and Cons
PMP’s pitfall is the lack of transparency in an open auction, primarily because it relies solely on 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 is Publift (which, even though it is, at its core, 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 handle everything related to setup, troubleshooting, and reporting for you, allowing you to focus on acquiring premium ads, which, in turn, generate more revenue.
3. Preferred Deals (PD)
Preferred deals, as the name suggests, occur when the publisher reserves ad space for a particular advertiser and the two enter into an agreement that benefits both parties, as in PMPs (Private Marketplaces). As a result, the advertiser gets the highest-performing inventory and the relevant audience at a predetermined price or CPM.
However, unlike other programmatic ad types, this one doesn’t guarantee that publishers will receive bids from advertisers.
This programmatic arrangement starts when a user enters a website. Then, an ad request is sent to the advertising network for acceptance or denial. The advertiser that gets 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 a compromise between RTB’s open competition and PMPs’ controlled medium, but let’s examine 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 to choose Preferred Deals, allowing you to select between Google Ad Manager, Sevio, or OpenX. However, it all comes down to each platform’s ease of use: Google and OpenX are well known for offering a more technical, in-depth approach, while Sevio’s Ad Manager 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) to automate the Request for Proposal process, serve and track ads, thereby facilitating one-on-one negotiations between advertisers and publishers.
The transaction between the parties is conducted through a DSP; the advertiser agrees to the publisher’s price, reserves the premium inventory, and publishes the ad on the publisher’s behalf.
Programmatic Guaranteed (PG): Pros and Cons
PG offers a powerful blend of automation and programmatic advertising efficiency. 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.
As with Preferred Deals, any SSP or DSP could offer PG.
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 an open auction, whereas the programmatic guarantee allows only certain advertisers to agree on publishers’ specific ad placements.
Moreover, PG is the only programmatic offering that allows advertisers to reserve inventory for their ads to be displayed 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 occur 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 advertisers increased flexibility. They can bid on ad inventory but aren’t obligated to buy it.
How to Choose the Right Programmatic Type for Your Needs
There are four main types of programmatic advertising, and it is highly recommended that you choose the right one for your business needs; however, the process can be overwhelming. Fear not; we are here to help you make the best decision regarding your business requirements and objectives.
Here are some key factors to consider before choosing your programmatic type:
1. Campaign Goals
- Brand Awareness: Real-Time Bidding might be your solution if your business goal is to increase brand awareness. Its primary goal is to reach broad audiences and increase brand recognition.
- Direct Targeting: If you want to reach a specific audience, you can do so through the Private Marketplace. This programmatic type lets you target publishers with highly relevant audiences.
- Premium Inventory and Brand Safety: Opt for Programmatic Guaranteed for greater flexibility while maintaining full control over your ads.
2. Campaign Budget
- Cost-Effective Reach: Real-Time Bidding (RTB) is recognized for providing cost-effective solutions while targeting a broader, yet highly 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 deliver guaranteed impressions at a higher cost than other programmatic advertising formats.
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 can reach a wider audience, thereby increasing your brand’s reach.
- High Precision Targeting: The Private Marketplace is your business, so you should opt for targeted advertising. It will only reach audiences who align with your brand’s mission and vision.
- Direct Negotiation: Programmatic Guaranteed (PG) enables your business to negotiate collaboration terms directly, catering to tailored audiences with unique needs.
Please remember that no single programmatic type is universally ideal; it all comes down to your campaign goals and how cost-effectively you reach 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 used in ad campaigns.
1. Display Ads are probably the most widely used ad format, serving as the visual billboards of a business, regardless of 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 are engaging and fresh, offering interactivity rather than a traditional, static format. This ad could boost user engagement, increasing interactivity and brand recognition.
3. Video Ads are popular due to users’ entertaining way of consuming content, and there are three main types: in-stream ads, outstream ads, and in-display ads.
4. Mobile Ads, as the name suggests, this type of ad is specifically optimized for smartphones and tablets and can be banners or interstitial ads.
5. Native Ads seamlessly integrate with the overall content of a website or application, mimicking its look and feel.
6. Connected TV is an advertising platform that uses a TV connection to support content streams from Apple TV, Xbox, and PlayStation.
7. Digital Out-of-Home ads use outdoor spaces to display brand advertising in various formats, including billboards, posters, kiosks, and street furniture.
8. In-Game Ads can take multiple forms, from interstitial ads, native banners, contextual ads, rewarded video ads, playable ads, and advergaming. The video game industry is expected to reach a market volume of $363.20 billion by 2027, so it’s no wonder that in-game advertising is on the rise, too. Given that more than 3.22 billion people play games worldwide, this presents an excellent opportunity for brands to easily advertise their offerings.
FAQ
PMP stands for Private Marketplace, an invite-only auction in which a publisher grants a select group of advertisers access to bid on its inventory. It’s still a bidding process, just restricted to a chosen pool rather than open to everyone like RTB.
Programmatic Guaranteed is a fixed-price, no-auction deal with reserved inventory. PMP is still an auction, just a private one limited to invited advertisers. PG gives you certainty; PMP gives you competition within a controlled group, with no guarantee that the inventory sells.
Both are fixed-price, one-on-one arrangements, which is why they’re easy to mix up. The difference is commitment: a Preferred Deal gives the advertiser first look at a set price, but they can walk away, and the inventory goes to open auction. Programmatic Guaranteed has no walk-away option; the inventory is reserved and sold.
Four: Real-Time Bidding (open auction), Private Marketplace (invite-only auction), Preferred Deals (non-guaranteed 1:1), and Programmatic Guaranteed (guaranteed 1:1). RTB and PMP are auction-based; Preferred Deals and Programmatic Guaranteed fall under programmatic direct.
Not quite. Programmatic direct is the broader category covering any deal negotiated one-on-one rather than through open bidding. Programmatic Guaranteed is one specific type within that category; Preferred Deals is the other.
The short answer: run both in parallel before fully cutting over, and confirm your ads.txt and sellers.json entries are updated before deprecating the old SSP. We cover this in more depth in our SSP migration guide.
Yes, most publishers run a mix. A common setup is Programmatic Guaranteed or Preferred Deals with key advertisers for guaranteed revenue, backed by RTB or PMP to fill remaining inventory. Combining types is standard practice, not an either/or choice.
Final Thoughts
As we’ve reached the end of this comprehensive guide, understanding the four main types of programmatic advertising deals is mandatory. As a result, your business can navigate a world filled with successful campaigns that align with its goals.
Now, more than ever, it is time to embrace data-driven decisions while automating manual labor. This will unlock your business’s full potential while elevating your marketing efforts.
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