Offers entered by publishers into PubMatic can be listed in an auction-based channel (PMP-G, PMP, Preferred, or RTB) or a direct channel (AG). Publishers can assign rules and priorities that apply to the bidding process on their inventory.
Priorities determine which of the bids from demand sources should be considered in the bidding process. PubMatic has traditionally provided 100 priority levels (P100). This offers flexibility, but with so many levels, it can result in underperforming campaigns/lower fill rates for some deals due to inadvertently setting overlapping rules.
To provide a simpler priority model for publishers, PubMatic is implementing a new model that includes a maximum of 16 priority levels (P16). When this goes into effect, all new PubMatic customers will be set up on the P16 priority model.
Existing PubMatic clients may opt to move from the P100 to the P16 model. Existing deals will be mapped manually to the new priority levels.
Within the P16 model, each offer type has an available range of priorities available to apply. This sets higher priority for some types of deals over others for a publisher’s inventory. For example, PMP-G deals have a higher priority than RTB. It is important to understand the hierarchy of how each is considered when applying Rules and Priorities. The following are listed from lowest priority to highest.
Open RTB (Real Time Bidding) is an auction-based open market that enables the buying and selling of online ad impressions through instantaneous auctions, facilitated by ad exchanges or Demand and a Supply Side Platforms (DSP & SSP).
ORTB = P8-16 (Default=P16)
Private Marketplace (PMP) is an invitation-only marketplace where publishers offer a portion of non-guaranteed inventory be sold at a specific minimum (floor) price. When PMP buyers bid on inventory in PMP, the highest bidder above the floor wins the auction. If no PMP buyer meets the minimum price, the inventory is made available to the open market. If at that time the inventory is bid on by both a buyer in PMP and the open market, even if the open market bid is higher than the PMP bid, if PMP has a higher priority set, it will win the bid, even at the lower price.
PMP = P8-P16 (Default=P16)
Example: PMP is assigned a P8 and gets a bid of $2 & RTB assigned a P14 gets bid of $3 = the $2 PMP bid wins. Even though it is a lower price, it’s a higher priority, so it will win the bid.
PMP provides controlled buying with price agreements for bids with an emphasis on margin improvement for the seller. PMP gives “first look” privilege to multiple buyers.
A Preferred Deal is a special arrangement within PMP in which publishers give a single buyer “first look” at inventory, listed at a fixed price. It is still technically an auction, but it is initially only presented to one buyer, who bids on the inventory. If the bid is higher than the fixed price, they only will pay the fixed price. It is given the same priority as RTB or PMP by default, but can be given a different priority within the P8-P16 range in the PubMatic system.
Preferred = P8 – P16 (Default=P16)
Private Marketplace-Guaranteed (PMP-G) deals are made between a single buyer and single seller with the agreement of minimum guaranteed spend at a fixed price. Advertisers guarantee their purchase of a percentage of a publisher’s inventory in PMP-G, which provides more predictable revenue for publishers (an advantage over PMP or RTB). Publishers forecast their available inventory as accurately as possible so that buyers ensure they can guarantee a commitment based on that forecast.
PMP-G = P5-P7 (Default=P5)
Automated Guaranteed (AG) enables publishers to set aside inventory for exclusive, direct sales with a buyer. Using this programmatic direct model, publishers have more control over how inventory gets priced and managed. Buyers receive the advantage of having a more efficient and streamlined way to do direct buys with publishers.
AG = P3&P4 (Default=P3)
How Priority Levels Work
- Rules have a priority range of P1 (highest) - P16 (lowest). P1 & P2 are exclusively for rules. This helps publishers control their inventory better.
- You cannot assign a priority level outside of the range for each channel. For example, you cannot assign a priority of 4 (P4) to a PMP offer; you can only assign P8- P16 for PMP.
- AG is higher in priority than any auction-based channel and receives a default priority level of 3 (which can be changed to 4).
- The default level for PMP-G is P5.
- The default level for Preferred, PMP & RTB is P16.
- A floor set for Preferred, PMP or RTB will not have any impact on higher priority channels.
Optimize for Price
- When selected, auction-based inventory will be sold to the highest bid, regardless of priorities set.
- Priorities are ignored when ‘Optimize Based on Price’ is selected. It does not change all priorities to the same level (e.g., P16), it completely ignores priorities to sell the inventory to the highest bid. (Rules are honored, but not Priorities.)
- This is useful for publishers, if for example, they have met their PMP-G inventory commitments for a time period, but still have inventory they want to be sold at the highest price. They can set this option to optimize based on price to maximize their monetization.
- This option should not be used for ongoing management of all your inventory, but can be used to move inventory that remains after commitments to buyers have been filled. It is a setting that can be used temporarily to clear your inventory.
- Exercise caution when using this feature so that you don’t jeopardize relationships with buyers. For example, if you’ve given first look to a buyer, don’t set that inventory for 'Optimize Based on Price.’
- Publisher has PMP-G inventory they want to get $2 for.
- The buyer commits to 2 million impressions for $2000 for a 14-day period.
- On day 13, all impressions committed to that buyer have been filled.
- Publisher sets 'Optimize Based on Price' for the inventory at that point.
- Publisher then gets additional bids:
Bid 1: Preferred (P8) comes in at $3
Bid 2: PMP (P10) comes in at $2.50
Bid 3: ORTB comes in at $5
- Bid 3 will win because it is the highest price. Priorities are ignored, so the fact that Bids 1 & 2 are a higher priority is irrelevant and the publisher gets a higher price than they would have had they not set ‘Optimize Based on Price.'