Melysa Chong — May 11, 2020 In the world of programmatic advertising, navigating through the different types of inventory can be overwhelming. The digital advertisers and marketers that use an inventory strategy are better able to deliver their ads to inform, persuade or remind their targeted audience. According to eMarketer, programmatic ad spending will account for 86.5% of all digital ad dollars in 2021. Understanding the different inventory strategies available and considering its use cases will not only help you plan for a scalable campaign, but it can also help ensure ads are running on premium, brand-safe inventory.
So, what is ad inventory? Advertising inventory is the number of ad placements available to be transacted on a publisher’s website. Ad inventory can be segmented in many ways, whether it is by the supply partners where the inventory can be bought from, the type of device the ad can be displayed on, or the specific geography to reach an audience. Just like planning a campaign, developing an inventory strategy, and how you will leverage the different domains and ad placements available will have an impact on how effectively you can reach your campaign goals.
With so much inventory available, and so many factors that influence what makes an ideal inventory strategy, we’ve compiled some questions to consider before you actually start building your campaigns:
- What is the targeted geography? The level of inventory available at the city level is limited compared to country targeting.
- Is there a specific device (desktop, mobile web, mobile-app, Connected TV (CTV), etc.) you are targeting? The inventory available for device types varies depending on when users are on their devices. Besides inventory, this is also important to consider for your ads because you need to ensure the creative sizes used are aligned with the device the ads will be served on.
- Is there a set time period or event when it is most ideal to reach your audience? Inventory can vary at different times of the day, or days of the week. It will also change depending on what tentpole or sporting events are occurring, such as the Super Bowl.
- How do you want to reach your audience? Is it by targeting contextually via websites, or by targeting an audience segment? Some advertisers may use a contextual approach by targeting only finance sites with no additional audiences layered on. Whereas, others will want to target a specific audience segment like accountants, regardless of what they are reading online. A hyper-targeted approach is to leverage both targeting options in tandem.
A well-thought-out campaign targeting strategy will not necessarily generate adequate results without proper understanding and assessment of the inventory used. That is why having an inventory strategy in mind is so important. Now that you have an idea of what factors go into building that strategy, it’s time to get started on actually building it!
The majority of the publishers in the programmatic ecosystem use four selling strategies for the different types of inventories available: open exchange, private auction, preferred deal, and programmatic guaranteed. Let’s define and discover the opportunities when to best utilize each in your strategy!
Open Exchange
This is the most common and familiar strategy for digital marketers. Also known as the open market, the open exchange is the place where the majority of online ad inventory is transacted, usually through some form of real-time bidding (RTB). Depending on the publisher’s strategy, the open exchange can either make up the bulk of a publisher’s inventory, or it can be made up of remnant inventory on the publisher’s site that was not sold in a private auction, as a preferred deal, or in a programmatic guaranteed environment. The publishers will set a floor price, and advertisers will bid for the available inventory in a second-price auction. The highest bidder wins the ad placement and pays $ 0.01 above the second-highest bid.
When to consider using an Open Exchange Strategy?
Running a campaign through the open exchange is the most cost-effective way to buy media on a wide scale because there is a larger amount of inventory available. Leveraging the open exchange as part of your inventory strategy provides the opportunity to be creative with your targeting parameters, and allows flexibility to address any modifications needed to ensure an effective campaign.
A common tactic used in many inventory strategies is a domain whitelist, while running on the open exchange. This provides scale from accessing all available exchange partners, while allowing control over which publishers the ads are able to bid on. Keep in mind that having a healthy list of domains to whitelist is essential for this to work.
Private Auction
The concept of a private auction is very similar to the open exchange, with one main difference— as the name suggests, it is a private, invitation-only strategy. RTB in a private auction is commonly known as a private marketplace or PMP for short. Similar to the open exchange, there can be multiple buyers competing in a private auction environment, where the publisher will provide a deal ID to all buyers participating and have the freedom to set a floor price. The advertiser with the highest bid wins the spot, and pays $ 0.01 above the second-highest bid.
When to consider using a Private Auction Strategy?
The optimal scenario to run a campaign through a private auction is when you want to access higher-tier placements that are not available on the open exchange or purchase inventory of a specific channel or format. For example, you may want to use a publisher’s 1st-party data which can be done through a deal, or want priority and greater control when it comes to purchasing in-app inventory or premium CTV placements in an auction.
Some DSPs have the capability of allowing their advertisers to buy inventory through a hybrid model. This allows the campaign to bid on inventory in the open market normally but utilize a private deal ID as well. Providing the campaign with an extra boost of inventory will increase the number of requests the campaign is eligible to bid on.
Preferred Deal
Unlike a private deal, which is still up for RTB in a private auction, a preferred deal is a non-auction-based transaction, where a publisher will set a fixed CPM for the premium inventory the advertiser will likely purchase. It is a one-to-one deal made between the publisher and the advertiser with no guaranteed volume of inventory. An advertiser will typically approach a publisher with specific needs and after a price is negotiated a deal ID is provided.
When to consider using a Preferred Deal Strategy?
Because of its non-auction-based nature and generally higher pre-negotiated fixed CPM, you may want to consider this strategy for very similar reasons to a private auction approach. The main difference is the priority level set by the publisher is usually higher for a preferred deal.
Programmatic Guaranteed
Programmatic guaranteed, also known as PG for short, is similar to a preferred deal strategy in the sense that it is a one-to-one deal made between the publisher and the advertiser. The advertiser pays a flat negotiated CPM for the inventory that they are purchasing. In return for purchasing all of the impressions fulfilling the criteria set, the publisher will set aside or reserve inventory for the advertiser.
When to consider using a Programmatic Guaranteed Strategy?
This strategy is best used when you have a set allocated budget you can commit to buying all relevant impressions, negotiated at a flat CPM with a publisher within a set date range. Programmatic guaranteed can help lock in rates against an audience that is hard to find, or it can help guarantee delivery on campaigns—especially during periods of high competition, such as election time.
Choosing an Inventory Strategy
Many advertisers struggle when trying to determine which inventory strategy to choose. Below is a mini cheat-sheet to help you figure it out:
Programmatic advertising will only continue to grow as advertisers and performance agencies are adopting a more multi-channel approach to their marketing strategies. Having a solid understanding of the four fundamental types of programmatic ad inventory will not only help you reach your bottom line but will also provide you with the tools to buy and plan smarter.
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