The Issue with Private Marketplaces

The subject of Private Marketplaces (PMPs) is trending once again. Are they worth the hype?

For both publishers and advertisers, these invite-only, exclusive suit-and-tie “events” seem to provide a safe haven for offering and buying high-end inventory while maintaining brand safety. The concept appears to be mutually beneficial for both buyers and sellers. Is it though?

Advertisers who focus on return on investment and performance can find them both in the open market. That’s a fact. It’s a simple and straight forward mechanism. Buyers want access to inventory at the lowest prices possible, maintain the ability to reach their target audience on the platforms they choose and ensure their KPIs are met. The process is logical, automatic and free from the intervention of people and opinions.

While some advertisers are extremely happy with real-time bidding platforms, others may feel like they are somewhat crude. The opportunity for more premium placements presented itself in the private marketplaces.

In 2017, ad spending in PMPs in the United States stood at $6.46 billion. It continued to climb and this year, it is estimated to reach the $13.85 billion mark.

The Issue(s) PMPs don’t provide a reliable method for advertisers to guarantee inventory for the future at a fixed price. It does however provide them with the ability to segment off inventory without guaranteeing a spend.

The PMPs give buyers a bird’s eye view of “better” ad inventory with flexible creative abilities and the euphoria of brand safety without giving publishers the guarantee of monetization for that inventory.

The private marketplace does not provide publishers with the secured revenue they look forward to from inventory. It’s a well-known fact that ad revenue drives great content. The absence of it therefore translates to a direct hit to the publisher’s content quality or even worse, the very ability to create it in the long run.

The private marketplaces lack the effectiveness of trading offered by open auctions at open exchanges. It makes buyers and sellers focus more on trying to get the best deal and less on actually getting it.

Industry experts believe that the private marketplace gives advertisers and agencies the driver’s seat. Others believe that the oversupply of inventory in the “premium” category caused publishers to lose the ability to drive a hard negotiation. There is also a lack of trust between both sides. The nature of the ecosystem means that advertisers don’t necessarily need to provide campaign parameters to publishers.

Sure, all publishers want their inventory to be labelled premium. However, is that the best option when one thinks of the cost of operations and not missing the wide array of monetization opportunities that present themselves in blocks of content? Could publishers actually be harming themselves by operating exclusively on guaranteed deals? We would love to hear your thoughts on the subject.