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What is PMP?

What is PMP?

PMP deal stands for “Private marketplace” deal. It is usually a deal made for direct buying of programmatic inventory between a publisher and an advertiser or agency. PMPs are also referred to as “Preferred Deals.”

Mostly SSP (Supply Side Platform) will manage the PMP private marketplace. It differs from open auction, contact is made between the publisher and the advertiser. The parties negotiate price, segments, quality of traffic and other terms. Higher priority is given to PMPs than SSP’s open auction.

Difference between RTB & PMP    

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Real-time bidding is a computer-run auction that occurs in the time it takes a webpage to load, which allows advertisers to compete to serve targeted ads to their desired customers. 

PMP Deals are invitation-only real-time bidding auctions where a selected number of advertisers are invited to buy their inventory from one or more publishers.

There are thousands of advertisers and millions of sites in the open market (RTB). This is hard when buyers are searching for very particular individuals. Think of a huge farmer’s market with thousands of farmers and thousands of buyers, and you’re a buyer looking for the perfect apples. You understand that you’re looking for large, green, organic and mature. We can find a good one, but you don’t really have great chances of discovering the ideal apple.

So now you can pay extra to go to the VIP region where there are only the finest apple farmers, but $5 is the cheapest apple. Now you can discover the apple you want, but you’re still competing to discover the one you want with all the other sellers. Your chances are better at least. This is the same as PMPs.

But this ideal apple you really want, and you know which farmer has it. He says he’s going to give you the perfect apple for $10, but he’s going to bring it to your home and completely skip the farmer’s market and cost haggling. This is how direct programming works.

Advantage for Bidders

The most common scenario is that the bidder will estimate what they think they need to bid on the open auction to get the impression, and the PMP rate is set, so they’ll just select the cheaper one and buy it there. So not only is the publisher spending funds on PMPs but on those impressions, the publisher even loses cash. PMPs do not increase the pressure of the bid. Instead, they restrict competition. Unless the line items are altered, however, the PMP effectively pushes the open auction of SSP down in priority, while the PMP competes with all other cost priority demand.

How Does Header Bidding Play Into This?

Header bidding only makes the output of PMP worse. The PMP still gets to cheat priority levels on the source SSP against the open auction, but the PMP typically runs at the same priority level as all bidders on the header. So the only reason the PMP often won before bidding header was because it reduced competition and bid pressure — header bidding adds that bid pressure back in, and the PMP rarely win

Sales Overhead

The programmatic salesperson is usually responsible for this in environments where publishers use PMPs. Although SSPs usually take a smaller revenue share (less than 10 percentage) for PMPs than the open auction, the programmatic salesperson who arranged the deal usually takes that cut and potentially more (between 8-15 percentages) as commission. In particular, PMPs can run negative ROI — revenue officers and ad operations managers will often seek to take advantage of the lower share of SSP revenue on PMPs, without taking sales commissions into account.

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