Today, you can sell your website inventory programmatically in various ways. First and foremost, when we think about programmatic auctions, we think of real-time bidding (RTB), a.k.a. the Open Auction. In this article, we will take a closer look into what exactly Open Auction is, what are its advantages and disadvantages, and how it differs from Programmatic Direct deals.
What is Open Auction?
Open Auction is commonly known as RTB, and/or open marketplace, open exchange. This is currently the most popular way of trading one’s inventory programmatically and it has both its pros and cons, which we’ll look at in a bit. In an Open Auction, all demand sources on the selected platform are allowed to bid for the specified units, while publishers can set price floors and block certain advertisers and/or ad types. RTB has the lowest priority in the ad server, second only to house ads, and is most suitable for monetizing your remnant inventory. Currently, most open marketplaces run on first-price, meaning that the highest bid wins and the publisher takes a share of that price, depending on the platform’s terms.
Advantages
- Accessibility: easy and quick setup that can be utilized by publishers of all sizes;
- Wide demand pool: ideal for monetizing any unsold impressions and maximizing your revenue;
- Hassle-free setup and optimizations: great for new publishers with less experience and no advertiser connections yet. Just a few simple steps to get started. Make changes to the setup at any time;
- Inventory control: publishers decide on the price floors, audience targeting, ad units to be included in the auction, type of ads that can be displayed on their website. They can also exclude specific buyers if they wish to;
- Increase impression value for an unsegmented audience: if your site’s audience and/or content does not possess any unique characteristics to pitch to advertisers, then you might be better off taking advantage of DSP’s targeting strategies through the open market.
Disadvantages
- Low eCPMs: the high volumes of impressions available through Open Auction coupled with the issues that negotiation with the advertisers is not possible and they often don’t know exactly from which publisher they buy, drives CPMs down and decreases revenue for website owners.
- No deal guarantee: publishers can set a price floor to their liking, but there is no guarantee that there will be buyers willing to bid for it at all. High price floors directly influence fill rates and publishers need to make careful analyses of historical data to determine their inventory true value.
- Bad ads: malvertising is a big issue in the open market where your inventory is exposed to attackers hunting for vulnerabilities. The issue is worsened by the lack of transparency and many intermediaries in the buying process, which makes it very hard to identify the source of the bad ads.
Open Auction vs Programmatic Direct deals
We’ve already discussed in more detail what Programmatic Guaranteed, Preferred Deals, and Private Auctions are, check our previous blog posts if you want to learn more about any of them. All three of them are known as Programmatic Direct deals, as opposed to the Open Auction. Let’s look at the differences between them:
Source: Google
Different types of inventory would be appropriate for different types of deals and that is why it’s important that publishers understand the differences between them, their pros and cons, and when to use each type.
To sum it up
Open Auction is where you get the most diverse demand and can try to sell any unsold impressions through other means. It requires a low level of involvement in terms of setup and optimizations and is great for publishers who are just starting out. Once you get the hang of it and gain a better understanding of your inventory value, you may want to try private auctions where you invite specific advertisers, set a minimum price and from then on it’s similar to Open Auction. You get the advantage of greater deal transparency, safety, and higher rates. With more knowledge of your audience and building relationships with advertisers, you may try one-to-one preferred deals or even programmatic guaranteed deals where you secure not only the price for your inventory but also the volumes you’d sell.