What Is Difference Between Open Auction, Private Auction, & Preferred Deal in Programmatic Advertising

Programmatic advertising offers multiple ways for advertisers to find the right media inventory for their ads. But there are a few different ways to acquire media inventory programmatically, advertisers sometimes get confused about which is the best way. To lessen the confusion, let’s understand the differences between the open auction, private auction, and preferred deal.

Programmatic:

In programmatic, open auction or the real-time bidding (RTB). In open auction, inventory prices are decided in real-time through an auction and any publishers or advertisers can participate. Publishers place their media inventory in an ad exchange at a specific minimum cost per mille (CPM) price and advertisers bid against one another for the available media that they desired. The highest bidder wins the impressions.

Private Auction:

Private auction is similar to open auction, except publishers restrict participation to selected advertisers only. In some cases, publishers may enable specific advertisers to apply for an invite to participate in private auctions. In short, advertisers can bid in the available media inventory only if they are invited to do so. Much like the open auction, advertisers or ad exchanges can set a minimum CPM for each advertiser. Again, the highest bidder will win the impressions.

Preferred Deal:

The preferred deal is an option that bypasses auctions completely. The preferred deal makes it possible for publishers to sell their premium media inventory at a negotiated fixed CPM to only selected advertisers. The deal is then transacted in real-time and advertisers will win the impressions by bidding at or above the fixed CPM price set by the publishers.

Preferred deals provide publishers with a controlled and stable revenue stream through this secluded transaction environment. It gives advertisers access to more exclusive, first-look inventory with stable volume and no surprises on pricing. The only catch here is, if advertisers bid on a preferred deal impression, they are no longer eligible to bid on that same impression in the open auction.

In short, open auction allows all publishers and buyers to bid in real-time.
Private auction operates in the same way, however, participants include one publisher and multiple advertisers who have been invited to bid by the publisher.

a preferred deal is a direct deal between publishers and advertisers at a negotiated fixed pricing.