Preferred Deals, also known as "first right of refusal" deals, are a type of programmatic advertising transaction where advertisers get the first opportunity to buy ad inventory at a fixed price before it is offered in an open auction. This module will cover the key aspects of Preferred Deals, including their definition, benefits, and how they fit into the broader programmatic advertising landscape.

Preferred Deals are a type of programmatic direct deal where:

• Fixed Price: The price for the ad inventory is pre-negotiated and fixed.
• First Look: Advertisers get the first opportunity to purchase the inventory before it goes to an open auction.
• No Auction: If the advertiser passes on the inventory, it then moves to an open auction where other buyers can bid for it.

1. Fixed Pricing: Unlike Real-Time Bidding (RTB), where prices fluctuate based on demand, Preferred Deals have a set price agreed upon by both the buyer and the seller.
2. First Right of Refusal: Advertisers have the first chance to buy the inventory. If they decline, the inventory is then made available in the open market.
3. Direct Relationship: Preferred Deals often involve a direct relationship between the advertiser and the publisher, fostering trust and better communication.

• Guaranteed Access: Ensures access to premium inventory before it becomes available to competitors.
• Price Stability: Fixed pricing provides budget predictability and avoids the volatility of auction-based pricing.
• Quality Control: Direct deals often mean higher quality placements and better alignment with brand safety standards.

• Revenue Assurance: Provides a steady revenue stream with pre-negotiated prices.
• Inventory Management: Helps manage and allocate premium inventory more effectively.
• Stronger Relationships: Builds stronger, more strategic relationships with key advertisers.

1. Negotiation: The advertiser and publisher negotiate the terms, including the fixed price and the type of inventory.
2. Setup: The deal is set up in the Demand-Side Platform (DSP) and Supply-Side Platform (SSP).
3. First Look: When the inventory becomes available, the advertiser gets the first opportunity to purchase it at the agreed price.
4. Decision: The advertiser decides whether to buy the inventory. If they decline, it moves to an open auction.

Let's consider an example to illustrate how Preferred Deals work:

1. Negotiation: An advertiser, "Brand A," negotiates with a publisher, "Publisher X," to buy premium ad slots on a popular news website at a fixed price of $10 CPM (Cost Per Thousand Impressions).
2. Setup: The deal is configured in both the DSP used by Brand A and the SSP used by Publisher X.
3. First Look: When a user visits the news website, the ad slot becomes available. Brand A's DSP gets the first opportunity to buy the slot at $10 CPM.
4. Decision: Brand A's DSP evaluates the opportunity and decides to purchase the slot. The ad is then displayed to the user. If Brand A had declined, the slot would have gone to an open auction.

Objective: Set up a Preferred Deal in a DSP and understand the workflow.

Steps:

1. Choose a DSP: Select a DSP platform (e.g., Google Display & Video 360, The Trade Desk).
2. Negotiate Terms: Simulate a negotiation with a publisher to agree on a fixed price for specific inventory.
3. Configure the Deal: Follow the DSP's interface to set up the Preferred Deal with the agreed terms.
4. Monitor Performance: Track the performance of the deal, including impressions, clicks, and conversions.

Solution:

1. DSP Selection: Choose Google Display & Video 360.
2. Negotiation: Agree on a $12 CPM for top banner slots on a tech news site.
3. Configuration:
   • Log in to Google Display & Video 360.
   • Navigate to the "Deals" section.
   • Click "Create New Deal" and select "Preferred Deal."
   • Enter the publisher details, inventory type, and fixed price.
   • Save and activate the deal.
4. Monitoring: Use the reporting tools in Google Display & Video 360 to monitor the deal's performance metrics.

• Not Monitoring Performance: Failing to regularly check the performance of Preferred Deals can lead to missed optimization opportunities.
• Ignoring Inventory Quality: Not all premium inventory is created equal. Ensure the inventory aligns with your brand's quality standards.

• Regular Reviews: Periodically review the performance and renegotiate terms if necessary.
• Leverage Data: Use data from your DMP to make informed decisions about which Preferred Deals to pursue.

Preferred Deals offer a strategic advantage in programmatic advertising by providing guaranteed access to premium inventory at a fixed price. Understanding how to negotiate, set up, and optimize these deals can significantly enhance your advertising strategy. In the next module, we will explore Audience Segmentation, a crucial aspect of targeting the right audience with your programmatic campaigns.