The four types of programmatic selling

About 20% of all online display advertising is now purchased via programmatic transactions, according to the IAB.  That means that just about 1 in 5 online display purchases never touch a human. This percentage will most likely continue to grow in the coming years, demonstrating that digital media companies need to get up to speed on programmatic if they want a piece of the pie.

Last week, the IAB published the first in an educational series for publishers on programmatic buying. The guide attempts to provide clarity from the publishers’ point of view on the four different kinds of transactions and how to differentiate between each.

Here’s our summary of the four programmatic deals:

Automated Guaranteed – This deal is negotiated between the buyer and seller with reserved inventory and fixed pricing. Reserved inventory is space on a publisher’s site that is put aside for a specific advertiser for an agreed price. The campaign runs at the same priority as other direct deals in the ad server. This type of transaction resembles a traditional direct digital buy with the main difference being the automation of the RFP and campaign trafficking process.

Unreserved Fixed Rate –These deals typically occur through an exchange but have pre-negotiated, fixed pricing. The inventory, however, is unreserved. These transactions usually have a higher priority than the Open and/or Invitation-Only Auction and are usually dictated by advertiser demand for a more predictable offering within the exchange.

Invitation-Only Auctions – In this auction, a publisher restricts participation to choice buyers and advertisers via a Whitelist or Blocklist. The selected buyers are expected to bid on inventory. A publisher may also share different information to add value to this select group of buyers while participating in this auction.

Open Auctions – These auctions carry much more freedom than those that are invite-only. In an Open Auction, a publisher will allow any buyer to participate in accessing their inventory. Usually there is no direct relationship with the buyer. Advertisers are usually unaware of what publisher they are buying on. DSPs will typically offer a list of exchanges/SSPs to the buyer that they automatically opt into.

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