Preferred Deal: How Does It Improve Ad Revenue

Updated on: December 23, 2023
Preferred deals are exclusive partnerships with selected advertisers that pay publishers higher revenue per ad impression.

In recent years there’s been a lot of chatter about private marketplaces (PMPs). A PMP deal enables a publisher to sell their ad inventory to a selected advertiser or group of advertisers based on negotiated terms around CPMs, inventory volume, targeting, etc. 

If you’ve ever been doing PMP deal management on an ad platform, you know that when it comes to selling inventory media, there are many different ways to do so. One such approach is the Preferred Deal. This post will break down every aspect of preferred deals and hopefully answer any questions to help you know how to monetize your ad inventory.

What Is a Preferred Deal?

A preferred deal is an agreement between a publisher and a buyer to provide preferential access to the publisher’s inventory before it is auctioned in the open market. The preferential access is provided in exchange for a fixed CPM.

Please keep in mind that the access is ‘preferential’, which means that you will give the first opportunity of buying your inventory to a specific advertiser, but it is not guaranteed that the buyer will always be ready to buy it. This is why a preferred deal is also called programmatic non-guaranteed. 

Why Should Publishers Know About Preferred Deals?

You, as a publisher, enjoy many benefits with preferred deals that can be missed out on while selling your inventory in private or open marketplace auctions. 

  • Fixed CPM: In preferred deals, you get the promise of a fixed CPM from the buyer in exchange for providing the first look advantage.
  • Premium Prices: Since you provide premium inventory to premium buyers, you also get the premium price.
  • Price Control: The unpredictability of prices is way less in preferred deals compared to the open market auction. Due to this, you have more control over the price of your inventory with preferred deals.
  • Flexibility: With Preferred Deal, you are not completely dependent on just one buyer. If the buyer isn’t purchasing your inventory, you can sell it in the open market.
  • Quality Control: You get the chance to audit and verify the campaign before running it on your website, which helps you ensure good quality of ads on your website.
  • Transparency: Directly contacting the buyer increases transparency in the process.

Preferred deals also have many advantages for advertisers as well, including:

  • Security: Preferred deals are less prone to ad fraud because there are just two parties involved in the process, i.e., the publisher and the advertiser. In the open market, there are many more players involved. So, the advertiser’s investment is more secure in preferred deals.
  • Brand Safety: The placement of ads is a major part of the deal. The publisher and the advertiser agree to display the ads in specific placements. Therefore, the advertisers can ensure that all the ads are delivered in a brand-safe environment. The open market cannot provide such assurance.
  • Flexibility: Preferred deals allow the advertiser to be flexible with the buying. The advertiser can pass off the opportunity if an impression is not compelling enough.

How Does the Preferred Deal Take Place?

Mostly publishers with high inventory volume and quality audiences can pull off preferred deals. Here is a generic overview of how the process takes place. 

  • First, the advertiser finds the ideal website to market the brand by looking into its audience, traffic, and other relevant factors for the marketing campaign.
  • The advertiser then contacts the publisher, and the campaign requirements are discussed. 
  • All the technical arrangements, like ad configuration, pixel tracking, etc., are made if a deal is agreed upon.
  • The advertiser places the order.
  • The publisher checks and verifies the campaign.
  • Finally, the order is executed by running the campaign.

How to set up a Preferred Deal in Google Ad Manager?

You can enter and manage preferred deals with the help of Google Ad Manager. Follow these steps to set up preferred deals in GAM. 

  • Link your primary Google Ad Exchange account to Ad Manager.
  • Go to Admin > Global Settings > Features. Find the Programmatic Direct button and toggle it on. Save the settings. This will enable Programmatic Direct for you.
  • Go to Sales > Deals settings and create your Publisher Profile so that buyers can see you in the marketplace. You can describe your inventory in the publisher profile and mention why a buyer should partner with you. 
  • Go to Admin > Global Settings and configure your inventory types. This will help your sales representatives specify the inventory type during negotiation.
  • Now your sales team can start sending and negotiating proposals with buyers. They can also receive the request for a proposal from the buyers.

Creating proposals:

  • Create a proposal by going to Sales > Proposals > New proposal.
  • Fill in all the details and click on Save draft.
  • Click on the New line Item to start creating the proposal line items.
  • Select the proposal to create the line item, then click New line item.
  • Fill in all the details, and do not forget to select Preferred deal while selecting the line item type.
  • Click on Save draft.

Your preferred deal is now set. Once you and the buyer agree to the proposal (after a few negotiations), the campaign can be executed.

Challenges with Preferred deals

No doubt, preferred deals can increase your average revenue and help you in getting the right price for your premium inventory, but there are some challenges as well that you should address before getting into implementation. 

  • Unfilled Impressions: The buyer has the option not to buy your inventory. If the buyer rejects the offer, then the impression moves to a private auction. Even if it remains unsold, then it moves to the open market. During all these transfers, the possibility of the impression remaining unfilled still looms above the publisher.
  • Entry Barrier: The publisher has to be big enough to catch the attention of big advertisers for preferred deals. This factor limits the entry of small publishers.
  • Risk of Undervaluation: Open market competition can increase your inventory prices. While dealing with the advertiser privately, you need to be aware of the right value of your inventory otherwise, you risk undervaluing your inventory. If you sold the inventory at the wrong price, there is no competition in preferred deals to increase that price.

Best Practices for Preferred Deals

Preferred deals can be a great media selling and buying method for publishers and brands, but it takes effort on both sides to make the relationship work. As a publisher, you must do your due diligence and consult with your sales team if unsure about any terms in the proposal. Here are a few factors to consider when setting up preferred deals

  • Ad inventory: Not all ad inventories are created the same. You should identify the premium ad inventory you want to make available for the deals and ensure that it aligns with advertisers’ campaign goals and target audience
  • Pricing: You should set a fair and competitive price for the ad inventory that reflects its value and demand in the market. While pricing the inventory, consider seasonality. While publishers keep the CPMs low in the first quarter of a year, they increase the prices in Q4 due to the influx of demand from advertisers.
  • Target audience: Advertisers look for users who might be interested in their products and services. To help them reach desired audiences, publishers often share first-party data and serve targeted ads. Not only does this help advertisers reduce advertising costs, but it also helps publishers improve engagement rates and revenue from ads.

While these three are the most crucial factors to consider, you should keep measuring and optimizing the setup to improve key performance metrics such as engagement, viewability, and conversions. You should also provide regular updates and reports on ad performance metrics to advertisers and be transparent about any changes or updates to the ad inventory or pricing.

Wrapping Up

For publishers and advertisers alike, the preferred deal model offers value to all parties involved. Publishers gain guaranteed CPMs at much higher levels than they would likely get on open exchanges. 

They don’t have to worry about ad fraud since the advertiser takes care of ad quality upfront. The process offers multiple advantages for advertisers: audiences are vetted, and no bidding issues are associated with programmatic ad buys.

The digital publishing world is a rapidly changing environment. Given this speed and the many different roles publishers have, it seems that the preferred deal concept came into being to keep everyone on the same page. The best practices mentioned above will help publishers of all types build successful relationships with advertisers.

Still have questions on preferred deals? Let us know in the comments.

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