PMP: 5 Questions with GroupM's Chief Trading Officer

Today, we posted our second piece in a series about private marketplaces in Canada for Marketing Magazine. In our last piece, John Rogers discussed why we’re seeing such fast growth of PMPs in Canada and how this model can be applied to programmatic TV. In short, advertising benefits tremendously from the use of programmatic technology, but the traditional use of real time bidding isn’t always the best fit for the constrained video market, especially when looking at the very limited supply of TV inventory. PMPs bring the best of both worlds together.

In this installment, we asked Neil Johnston, Chief Trading Officer at GroupM Canada, a few questions on the subject.

How quickly has the PMP market been growing in Canada?
The PMP market has grown very substantially in each of the past two years. The video trading market has traditionally been based on direct IO deals or RTB exchanges. In the last couple of years, we’ve started to see a big shift away from these models and towards PMPs. We now have some form of PMP arrangements with nearly every one of our partners on both the demand and supply side.

What are the advantages to your clients?
Private marketplaces offer four big advantages:

1. They provide advertisers guaranteed access to premium inventory programmatically. When suppliers have transparency into who is buying their inventory and how much they’re paying for it, they become more willing to programmatically sell premium content. Advertisers benefit from the application of data and automation while still ensuring their brand ads run in a premium environment.

2. They reduce the risk of getting fraudulent or non-viewable inventory. Fraud and viewabilty are both big issues for our industry. Advertisers want to know their ads are being seen, and they want to know they’re being seen by humans. With PMPs, it’s easy to choose very specific inventory partners that have a proven record of low fraud and high viewability. It removes the risk of bidding on unknown inventory that may not be up to the standards of the buyer.

3. They allow for negotiation within established relationships. This is especially valuable from an agency perspective. Our business revolves around buying media—and we buy a lot of it. A big value we bring to clients is the ability to negotiate the best possible prices for their media spend. The upfront purchasing model of a PMP allows those negotiations to happen—again, something not possible in bidded environments.

Auction based trading models, by the very nature of how they’re executed, don’t allow for pricing guarantees. PMPs, on the other hand, allow for upfront price floors, ceilings and reserved pricing. Before inventory is traded, both the advertiser and supplier come to mutually agreed upon terms through their longstanding relationships.

4. They allow technology partners to help with the heavy lifting. Advertisers need solutions that will ensure their ads are shown to the right people (reach), at the right time (relevance), and the right amount of times (frequency). They’ve worked out sophisticated models that determine what reach and frequency will drive results for their brand—whether that be direct sales or general brand lift.

Using partners like Videology, broadcasters and advertisers benefit from technology solutions that apply data and automation for determining the best possible outcomes. Videology, for instance, uses allocation theory in PMPs to determine the best use of ads and inventory, over a set period of time, to provide the greatest value to the supply and demand sides of the equation.

What are best practices, or what should both sides consider before entering into a PMP?
First and foremost, it’s essential that both sides understand what inventory is, and is not, desired and available.

For advertisers with direct publisher deals, it’s important they know what inventory is included in a PMP so they’re not doubling their efforts. If they’ve already purchased a certain inventory set or audience type directly from a broadcaster then they’re going to want different options in their PMP.

For broadcasters, it’s important to decide how much inventory to keep for direct sales and how much to make available for programmatic buying. While programmatic buying offers an increasingly important sales channel, there will likely be cases where direct sales still make the most sense from both the advertiser’s and media company’s perspectives.

The point of a PMP is to provide the most transparent and valuable relationship between a supplier, advertiser and technology vendor.

It’s also important we create high-quality marketplaces. Bringing advertisers sub-par inventory isn’t of any use to them—regardless of what model it’s surfaced through. We build private marketplaces with quality inventory because it drives the best results for our clients. That includes broadcast and premium digital video content.

Looking ahead, do you think PMP will be the primary model for broadcasters to programmatically transact on their linear inventory?
I actually think we’ll get to a point where this is the only model. Certainly for GroupM.

For the time being, advertisers and media companies appreciate the opportunity to have multiple trading economies, but PMP’s simplification of processes and efforts are far too great for the industry not to move fully in this direction. We’re seeing the shift happen and it is gaining speed.

This article first ran in Marketing Magazine.

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