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Apr 29, 2015 11:41:00 AM

The top 5 (pre-deal) keys to getting Private Marketplaces right.

PART 2 of the "How to fix Private Marketplaces" Series 

Part 2 of a 3 part series. Part 1: What’s wrong with Private Marketplaces (PMP)?.
Part 2 (below): The top 5 (pre-deal) keys to getting Private Marketplaces right.
Part 3 (coming soon): Three keys to post-launch success of private marketplaces

In the first post in the "Fixing Private Marketplaces series, we offered an initial review of the performance of PMPs by identifying the pain points and flaws that prevent sellers from making the most out of this programmatic channel.

Now, let’s talk about some best practices and guidelines for programmatic deals. For today's post, we are going to focus on getting the deal mechanism, inventory, and pricing right to give birth to a successful deal.

The Pre-Deal keys: Relevant demand, relevant inventory, relevant price

Key 1: Determine the right deal for the right use case
As a media seller, you need to adapt the PMP type to your inventory/audience structure and your demand partner's needs. Whether it's sharing data, offering exclusivity to a single buyer, giving transparency on URLs, creating a first round of auctions with “VIP buyers” only - or any combination thereof - sellers need to make sure the deal structure is right for the use case and desired outcome. Here is a handy chart we recommend referencing to help the decision making.

 

* Data shared via deals could be: audience, viewability, URL transparency, content categories…
* Data shared via deals could be: audience, viewability, URL transparency, content categories…

Key 2: Establish a well-defined inventory scope: 
When defining which part of your inventory will be made available via the PMP, you should make sure the deal:

  1. is in line with the buyer’s expectations and targeting
  2. won’t be conflict with other existing or planned PMPs. Make sure you take a look at “first look” deals struck so far as well as the rest of your deal portfolio. Deals that don’t achieve “the promised win rate might create buyer frustration. 

Key 3: Establish a “One PMP, one advertiser” policy:
Not all campaigns are equal in value. Agencies obviously don’t have the same targets, budgets and margins for all their line items. In other words, buyers are ready to offer different CPMs for different campaigns. Rather than driving your overall PMP revenue down by making a single “average” deal for a demand partner, try to create as many PMPs as there are campaigns, and adapt the pricing to the targeted brand’s industry (see below for more details about pricing).
 
Key 4: Be aware and leverage the fact that the market changes (and so do prices):
RTB is an erratic world when it comes to bids value and density. Still, some seasonalities (weekdays/weekends, beginning/end of month, beginning/end of quarter) and structural trends can be observed and should be taken into account when creating a PMP. Hence, as a media seller, you should avoid as much as possible PMPs without end date, and consider forecasting the future value of your inventory as a base value for your deal.

In the example above, a PMP (private auction) is started during the fourth week of May, at a price ($1.7 CPM) generating uplift versus what would have been generated at that time in the open auction market ($1.4 CPM). A month later, the open auction CPM has increased to $1.7, and two months later has reached $2.2. Therefore, our Private auction PMP won’t be profitable after a month, and will even start generating downlift…
Two ideas that come to mind here:

  • adapt the PMP time frame to the predictable future (in our example, set the PMP end date at June 30th) or,
  • adapt the PMP pricing to the time frame (if the PMP end date is July 31th, price it at $2.5 CPM).

NOTE: The prerequisite to the above price analysis is having the tools and know how to conduct such an analysis. As demonstrated, these insights are key to confidently price and negotiate your inventory.
 
Key 5: Data should feed pricing
The example above shows that a data-driven approach may prevent PMPs from deteriorating your overall programmatic revenue. For instance, looking at the open auction market as a baseline for PMP pricing enables you to define a minimum price for your deal. A thorough analysis of the value of the inventory offered, the demand partner and campaign targeted should be performed for each new deal proposal, making you comfortable about the price you’ll be showing your demand partners.
 
If you wish to learn more about affordable analysis, optimization, and deal making tools, look no further than Adomik. Adomik Deal Maker provides you with a decision-aid pricing tool to assess and understand the true value behind a PMP, update your packages’ prices and make sure your rate card is still in line with the current and future market conditions.

Stay tuned for the next segment to the Fixing Private Marketplaces Series. To get updates in your email when we post new content, submit your email below.

Topics: programmatic private marketplaces, Programmatic, PMP/Deal ID, RTB, Digital Publisher, Private Marketplace, Yield Management

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