There are 4 types of programmatic transaction models:
- Programmatic / Automated Guaranteed: The guaranteed amount of ad plays / CPMs traded with a fixed price.
- Preferred Deals: Fixed price ad plays / CPMs with no delivery guarantee.
- Private Auctions: A selected group of buyers bid to buy an ad spot.
- Open Auctions: All buyers bid to buy an ad spot.
Here’s a brief comparison table of these models:
Depending on your needs, you can utilize any of the models above.
At this point let us quickly discuss auction models.
In its early days, there wasn’t a term called programmatic. Instead, there was a term called RTB (real-time bidding). So there was only one model available: auction. An auction only makes sense if supply is scarce and demand is high. So what was (and still is) scarce: data (cookie) about the user.
Let’s say a user is about to buy a phone, a laptop, and a shoe. Each one of these different advertisers tries to target this same person, that’s why they bid to show their ad in real-time. It’s real-time, because at that very moment the user is loading a web/mobile page to access some content (e.g. news), and in milliseconds magic happens, an advertiser wins the auction and shows their ad.
We think it is still a little early for pDOOH to have something as scarce as a cookie. In pDOOH, there are mainly 3 things that could be bid for:
1- Audience
2- Screen
3- Time
Bidding for an audience segment is challenging (albeit it can be done), because, unlike digital advertising, data points in DOOH are mostly not real-time. Most of the audience targeting is done via some probabilistic predictions. And it’s unlikely that two different technologies will predict that a specific audience is around a screen at a certain moment unless they use exactly the same data points and same algorithms.
Bidding for a screen may not exactly be needed, because usually supply is higher than demand. Maybe some screens are highly demanded due to their great locations and/or their prestigious perceptions, but in that case, the media owner simply raises the price to match the demand - manually. No auctions are needed.
Bidding for time, like demanding the rush hours from the media owner may be an interesting one, but again can be solved by raising prices manually.
In the future, the auction model may be more relevant, but for now, it’s mostly about making pDOOH look similar to digital advertising (which is fine of course).
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