Open Or Private Marketplace? How To Decide

by Andrew Casale (VP Strategy)

We’ve continued to see private marketplaces as the preferred model for facilitating programmatic access to impressions from major publishing companies, with new announcements from the likes of Hearst, Federated Media and Condé Nast, along with many that have been in market for over the year (NBC Universal, Quadrant One, etc). However, while evaluating whether or not launching a private marketplace makes the most sense, there are three things every publisher should consider in the context of programmatic selling: relationships, data and transparency.


Both open and private exchanges use machines to handle workflow – automated buying and selling, targeting and optimization. The open model creates no conversation between the publisher and agency trading desk (ATD)/buyer, but is ultra efficient because it requires no setup. On the other hand, private marketplaces benefit from the requirement that relationships make them work — but that also means additional work is required to transact. Open and private marketplaces act as two tools that can be used exclusively or interchangeably based on the scenario to maximize the opportunity programmatic represents.

Publishers wary of real-time bidding (RTB) can arrange private marketplace deals through discussion with specific buyers on their own terms, rather than opening their impressions for all to access. We’ve had conversations with publishers who haven’t embraced programmatic selling, but want to transact with ATDs that are new prospects that their sales team should be talking to. Publishers may be specific about whom they want to buy, and only want to transact with that short list.

Relationships are very important for private marketplaces, but publishers have to dedicate resources to enable those relationships to thrive. In many cases, buying through private marketplaces is an easier “sell” for agency clients, especially conservative ones, because of a familiar brand name and warm relationship with the seller. Marketers may view open marketplaces as risky or foreign because billions of impressions in them, and only algorithms and machines facilitate the transactions. Certain brands embrace programmatic buying only when connected directly to premium publishers they know, skipping the open market entirely. While performance and price matters to marketers, so does brand association.


Publisher first-party data can have a significant impact on ad effectiveness. With RTB, publishers increasingly worry about how they’ll control their valuable user data so they typically leave data out of their strategy. Private marketplaces address this worry because data rights can be negotiated into individual deals. If the right deal can be negotiated, data can be made available at bid time as part of the transaction or omitted if the deal terms do not satisfy the publisher’s valuation of its data. Access to data is important to the buy side, and striking the right balance between price and budget can amplify the size of opportunity for a publisher.


Some argue that impressions available in private and open marketplaces are exactly the same. This is where transparency becomes important. With the correct configuration, private and open exchanges should never contain the same inventory. Typically, a publisher will only make its unallocated impressions available on the open market in a blind or semi-blind capacity. This is done for channel protection, to mitigate having impressions available for bid in real-time while a direct sales force is also selling the same impressions. However, buying blind means neither environmental quality guarantees nor contextual relevance, which deters advertisers from spending. Our internal research shows that selling blind typically means losing up to a half of all bids.

For publishers with multiple publications and millions of impressions, it makes sense to break apart the high valued placements and sub-brands (those that are in most demand), and carve out a private marketplace around these impressions. The remaining impressions are best suited for an open exchange where a publisher can access the most demand. It’s key for different impressions to be available in different buckets to create the appropriate buy side value proposition for a private marketplace.

Publishers considering programmatic selling should speak to the buy side directly. Publisher can better assess if they can meet advertiser needs through an open marketplace, or if advertisers are better suited for transactions handled one to one in a private environment. Every publisher is different, requiring a unique approach to maximize success.

Stop Calling ‘First Look’ A Private Exchange

by Andrew Casale (VP Strategy)

When evaluating and eventually buying private exchanges, there still seems to be considerable confusion from desks, and the DSPs powering buys about the practical usage of this channel. In my view the confusion is fueled by the lack of standards for the usage of the term ‘private exchange.’ There are several widely used tactics that create very different value to the buy side that, in my view, need to be better differentiated. And, only one tactic is fitting of the “private” label. I’ll compare two of the more commonly used approaches to the model and how they differ.

“First look” is a tactic widely offered by sellers who operate private exchanges. It effectively means prioritized access and prioritized bidding. Impressions are made available to the open RTB market and then cleared via a second price auction. Meaning the highest bid received from DSPs participating in the auction is cleared at the second highest price set by the sell side platform (SSP) representing the publisher.

However, publishers also want to incite buying and offer up rewards in return for commitments, and this is where the first look tactic comes in. Instead of the winning impression going to the highest bid, if a bid comes through from a preferred or prioritized buyer, that buyer wins the impression at whatever the pre-negotiated floor or fixed price is. The buyer is guaranteed to get the impression whether they would have paid more for it or not in the open auction. This privilege is typically granted in return for a commitment – perhaps a guaranteed quarterly or yearly spend that the buyer has made to the publisher, or just a commitment in spirit that the buyer will push more budget towards the publisher. Since RTB is still clearing a minority of display impressions (estimated at 25% of all impressions), price may be important but fill is equally important, if not more.

Depending on the buyer, the first look model is either very interesting or not interesting at all. Some buyers would rather take their chances in the open market and see what impressions they can get at presumably the lowest price, with no committed budget. Others have such a narrow targeted audience who they absolutely have to reach – and that’s when it is worth paying a higher average clearing price, and even commit some budget, to be guaranteed access to those valuable audience segments.

On the other hand, there are private exchanges in market today that are actually private exchanges. Meaning their impressions do not go to the open market to bid. These impressions are only made available to select buyers who have a pre-negotiated deal with a publisher. These private exchanges represent the rare case where a buyer can’t just take their chances on the open market and see what they get, as they’ll never access the publisher’s impressions. Every conversation that I have been privy to between a buyer and a publisher who operates in this capacity has been extremely positive because it brings something to the table that everyone wants – unique, unduplicated, differentiated impressions. Despite the massive size of the supply pool today, buyers are still seeking unique and premium inventory because their needs are not entirely satisfied by what they have access to today.

I’m not suggesting one approach is better than the other. Depending on the publisher, the optimal model will differ. My intent is to reorganize what we define as a private exchange. Doing so adds more credibility to both the usage of first look tactics and true private exchanges, as expectations will be set at the outset and less confusion will arise. This may hopefully serve to remove some of the fuel from the continued debate over this model.