If you’re a publisher who is currently looking to secure direct deals for your website, good work; many publishers find that direct deals can bring in a much higher CPM than their remnant inventory, further boosting their revenue and strengthening their monetization efforts. This post will focus on a way of creating something akin to guaranteed inventory while also creating price pressure within the auction. As you will see, both advertisers and publishers will win with this strategy.

Overview
Guaranteed inventory generally sits at the top of your waterfall. It’s highly coveted by advertisers who want to be the first impression that a user sees on your site and highly lucrative for publishers who can charge a premium to said advertisers for the opportunity to sit above the auction and get a first look. Typically Guaranteed inventory means you as the publisher are setting aside a certain amount of your available impressions exclusively for the advertiser.

Comfortably Clearing The Auction
This does carry some risk for the publisher. As a publisher, you have to feel confident that the CPM you are getting directly will almost always clear the vast majority of bids you are seeing in the auction. If the CPM you are receiving from a direct advertiser doesn’t comfortably sit above the auction, you may leave money on the table as the guaranteed advertiser gets to display an ad that may be worth less than the one from the auction that could have potentially ran had the guarantee not been in place.

That being said, for the publisher, the ideal situation is an advertiser who pays a very high CPM but doesn’t actually have guaranteed first look. In this scheme, the advertiser effectively takes first impression since their CPM bid is far above the normal remnant CPM that the publisher is seeing from their networks. For DFP users, you effectively create a line item that isn’t guaranteed inventory but rather normal inventory that goes through the auction. As a result, if there is ever a situation where the network can beat the advertiser’s CPM, it behooves the publisher to provide that specific impression at auction to the network, thereby maximizing publisher revenue. By making the advertiser go through the auction, you theoretically create price pressure within the auction by inducing network buyers to raise their bids and hopefully beat out the higher paying direct advertiser.

The ideal situation is an advertiser who pays a very high CPM but doesn’t actually have guaranteed first look.

Win Win For All
A lot of advertisers may not like this setup since they feel they are paying more for not much benefit. In fact, the advertiser should stand to achieve a much more effective campaign as well as ROI on that campaign since theoretically they are now paying the exact price they would like to hit for the exact number of impressions that will convert best for them (assuming they are optimizing their CPM bid based on their KPIs). First impression is thus determined by the auction, but generally goes to the higher paying CPM advertiser in most (if not all cases) and the difference between them getting guaranteed all first impressions versus getting close to all first impressions is negligible.

If you find yourself in the middle of negotiations where you can obtain a higher paying non-guaranteed advertiser, ensure that their CPM bid is well above the remnant CPM you are seeing so as to effectively give them “first impression” without guaranteeing the inventory (for legal reasons you will always have to state this in your IO so as not to misrepresent yourself); you maximize revenue optimization efforts since the advertiser has to go through the auction and will (most likely) win while (most likely) putting price pressure on the other networks, thereby increasing their bid at auction and delivering more overall revenue to you, the publisher. Your advertiser still gets what they want (“first impression”) because the CPM bid is so high that the auction usually can’t match this number while the publisher gets what they want because the higher paying advertiser CPM puts price pressure at auction and hopefully induces the networks to bid higher and make the auction more competitive.

…you maximize revenue optimization efforts since the advertiser has to go through the auction and will (most likely) win while (most likely) putting price pressure on the other networks…

It’s a good strategy for publishers who are working with a small handful of direct advertisers, and can lead to very strong revenue growth when implemented and managed properly.