Preferred deals: how a fixed price and a first look work in programmatic
Part of Curated deals and PMPs
The short answer
A preferred deal is a non-guaranteed programmatic deal in which a publisher gives one buyer the first chance to buy chosen inventory at a negotiated fixed price, before private auctions and the open auction. The inventory is not reserved and the buyer does not have to buy; impressions the buyer passes on go to other buyers.
Key takeaways
- The IAB's 2013 framework called preferred deals Unreserved Fixed Rate: unreserved inventory, a fixed price, one seller and one buyer.
- In Google Ad Manager, Preferred Deals have a fixed priority typically above private auctions and the open auction, while guaranteed line items generally serve first.
- Neither side is committed to volume, so delivery depends on the buyer bidding at the agreed price whenever the impression is offered.
- If two Preferred Deals target the same inventory at the same price, Ad Manager picks the winning buyer at random.
- Preferred deals suit buyers who want predictable pricing and early access without the commitment of a guaranteed buy.
What is a preferred deal in programmatic buying?
Definition
- Preferred deal
- A non-guaranteed deal between one publisher and one buyer at a negotiated fixed price, which gives that buyer the first opportunity to buy matching impressions before they are offered to auction buyers.
The IAB's 2013 paper Programmatic and Automation: The Publishers' Perspective (opens in a new tab) named this transaction Unreserved Fixed Rate and listed preferred deals, private access and first right of refusal as other market terms for it. It described the deals as existing within an exchange environment but with pre-negotiated, fixed pricing, typically at a higher priority than the open or invitation-only auction, and said they are usually driven by advertiser demand for a more predictable offering within the exchange space.
Platform documentation uses the same shape today. Google's Ad Manager comparison page (opens in a new tab) says a Preferred Deal covers inventory the buyer can optionally buy, gives the buyer an initial, or preferred, opportunity to bid at the negotiated price, and is non-guaranteed because the inventory is not reserved and buyers are not required to buy it. The buyer side calls it a non-guaranteed fixed deal: in Display & Video 360 a preferred deal is added as an inventory source with a fixed CPM rate type.
Where does a preferred deal sit in the order an impression is offered?
Google's Preferred Deals overview (opens in a new tab) states that the Preferred Deal line item type has a fixed priority value that is typically higher than private auctions and the open auction, while sponsorship and standard guaranteed line items generally serve ahead of it. The exception it names is when Ad Manager's dynamic allocation lets non-guaranteed demand compete with guaranteed line items in real time.
Publishers can also rank their non-guaranteed deals against each other. Ad Manager's deal priority setting lets a publisher favor certain buyers even if their bids are lower, with 1 as the highest priority, or choose Open Auction optimized, where every deal competes on CPM. The IAB's 2013 paper made the same point more loosely: preferred deals typically sit above the auction but can also sit within or below it. A buyer should ask where a deal will actually sit, not assume first position.
How does a preferred deal differ in operation from a private auction PMP?
Both are private marketplace deals, and both are non-guaranteed. Google's private marketplace overview (opens in a new tab) groups them together and then separates them by how the buyer is chosen and how the price is set. The operational differences follow from those two choices.
| Operational point | Preferred deal | Private auction |
|---|---|---|
| How it starts | A proposal negotiated with one buyer | An invitation to selected buyers |
| Price | Fixed CPM agreed in advance | A floor; the clearing price depends on the bids |
| Competition at the deal level | None: one buyer gets the first look | Invited buyers bid against each other |
| Documented priority | Above private auctions and the open auction | Above the open auction |
| Bidding obligation | None; the buyer may pass | None; buyers may pass |
| When the buyer passes | The impression may go to private auctions or the open auction | The impression may go to the open auction, if the publisher sells there |
| Buyer's main lever | Whether to bid at the agreed price | How much to bid above the floor |
| Best fit | Predictable price and early access to known inventory | Price discovery among a small group of buyers |
Section 7.3 of the OpenRTB implementation guide (opens in a new tab) describes the same arrangement as a First Look Trading Agreement: an access rule locked to the buyer, a known price floor, a deal ID required, an optional list of named advertisers, prioritization of bids expected, and targeting left to the buyer. In the OpenRTB 2.6 (opens in a new tab) bid request, a Deal object with at set to 3 tells the bidder that the value passed in bidfloor is the agreed deal price.
What happens when the buyer passes on a preferred deal impression?
Nothing binds the buyer to bid. The Preferred Deals overview says that if the buyer opts not to secure the inventory, or fails to place a valid bid above the negotiated CPM fixed price, the impression may become available in private auctions or the open auction. For the publisher that is a fallback; for the buyer it means each impression is a fresh choice.
Two consequences follow for planning. First, delivery is not promised. Ad Manager asks the seller to enter an estimated quantity for each Preferred Deal line item, and the comparison page says this value does not affect ad serving; it exists to monitor and troubleshoot delivery. Second, the seller keeps its options. The comparison page notes the publisher can reserve the same inventory in a guaranteed campaign for a better price, and guaranteed line items generally serve first.
How should a buyer set up and bid on a preferred deal?
Preferred deal setup in the buying platform
- Confirm the deal type before saving. In Display & Video 360, an inventory source cannot be switched between non-guaranteed fixed and non-guaranteed auction after it is saved, so pick the fixed CPM rate type for a preferred deal.
- Enter the agreed rate and dates. The rate is the CPM agreed with the publisher; the start date, optional end date and permitted advertisers come from the proposal.
- Target the deal from a line item that can win. Give the line item budget, flight dates and creative in the formats the deal accepts.
- Bid the agreed price. A bid under the fixed price is not a valid bid for the deal, so check that platform fees or margins are not lowering it.
- Watch deal level delivery. Compare available impressions, bids and wins with the seller's estimated quantity in the first days, and use the platform's deal troubleshooting to see why impressions were lost.
The paperwork should match the setup. IAB Tech Lab's Deals API specification (opens in a new tab) describes a fixed price deal with a price type of Fixed, and says the floor is only guidance to buyers unless the price type is Fixed. When a seller pushes deal terms through that API, a preferred deal would be expected to arrive marked as fixed price and not guaranteed.
When should a planner choose a preferred deal?
A preferred deal is a good fit when
- The plan names specific publishers or sections the client wants, and the buyer wants first access to them.
- The client values a known CPM over the chance of buying lower in an auction.
- Budget may move during the flight, so a guaranteed commitment would be a risk.
- The buyer expects to bid on the impressions offered, since a deal the buyer keeps passing on gives little advantage.
- The publisher has been reviewed for fit, page quality and its selling path before the proposal is signed.
- Someone will check delivery against the estimated quantity and renegotiate the price if the deal underdelivers.
A preferred deal is a weaker fit when the buyer needs a fixed volume on a fixed date, which calls for programmatic guaranteed, or when the plan spans many publishers and the goal is price discovery, where a private auction or a curated package is easier to run.
What does a preferred deal look like on a real brief?
Fictional example
Tax season for a tax preparation firm in the US South
A fictional tax preparation firm with offices in Georgia, North Carolina and South Carolina wants its display ads beside personal finance and tax filing guides from late January to mid April, in English. The agency picks two personal finance publishers after reviewing their articles and their selling paths.
Each publisher offers a preferred deal at a fixed USD CPM on its tax and money sections, with the agency's seat allowed. The agency accepts both, since the client wants a known price through filing season but may cut spend after the April deadline.
In the first week the trader sees that one publisher's deal shows far fewer available impressions than its estimated quantity. The publisher confirms a guaranteed sponsorship is running on the same section for two weeks. The agency moves budget to the other deal until the sponsorship ends.
How does PlacementGraph help choose publishers for preferred deals?
Frequently asked questions
Is a preferred deal the same as a first look deal?
In practice the terms overlap. The IAB's 2013 paper listed first right of refusal among the market names for preferred deals and used first look for publishers giving certain buyers priority access to inventory. OpenRTB's implementation guide calls the arrangement a First Look Trading Agreement. Some sellers use first look more loosely, so confirm the price model and priority.
Can a preferred deal be curated across several publishers?
Some sellers support it. Google Ad Manager's Preferred Deal setup lets a publisher choose a buyer or a curator as the entity responsible for the deal, from a list of supported third party curation partners. Ask who set the price, who chose the inventory and whether the curator takes a fee before accepting the deal.
Why does a preferred deal deliver less than its estimated quantity?
Because nothing is reserved. Guaranteed line items, including sponsorships, can take the same impressions first, other preferred deals at the same price can win ties, and the buyer's own targeting, frequency caps or bids under the fixed price remove more. The estimated quantity is a monitoring figure, not a commitment.
Do publisher pricing rules apply to preferred deals?
Not in Google Ad Manager. Its Preferred Deals overview says pricing rules set for the open auction do not apply to Programmatic Direct campaigns, because those are direct sold to a specific buyer. The negotiated fixed price is what applies, so any change to the price has to be renegotiated in the proposal.
Sources
- Programmatic and Automation: The Publishers' Perspective (opens in a new tab)IAB, September 2013
- Preferred Deals overview (opens in a new tab)Google Ad Manager Help
- Programmatic Guaranteed and Preferred Deals (opens in a new tab)Google Ad Manager Help
- About Private Marketplace deals (opens in a new tab)Google Ad Manager Help
- Add an inventory source to Display & Video 360 (opens in a new tab)Display & Video 360 Help
- OpenRTB 2.x implementation guide, section 7.3 PMP and Direct Deals (opens in a new tab)IAB Tech Lab, OpenRTB repository
- OpenRTB 2.6 specification (opens in a new tab)IAB Tech Lab, OpenRTB repository
- Deal Sync API Specification, version 1.0 (opens in a new tab)IAB Tech Lab, deal-api repository
Researched and written by PlacementGraph Research. Read how we research, source and update these pages. Corrections: diana@placementgraph.com.