The programmatic advertising landscape is experiencing extraordinary growth, with global programmatic ad spend reaching an estimated $595 billion in 2024, projected to approach $800 billion by 2028. As this market expands, advertisers face a crucial decision: should they opt for the predictability of programmatic guaranteed deals or the flexibility of open auctions? Understanding the nuances of each approach is essential for maximising your advertising ROI in today's competitive digital ecosystem.
The State of Programmatic Advertising
Before diving into the comparison, it's worth examining the broader context. It's estimated that 82.21% of all digital advertising will be programmatic in 2024, whilst 2026 will see $726 billion spent on programmatic advertising, rising to $779 billion by 2028. This explosive growth underscores the importance of choosing the right programmatic strategy for your brand.
The market dynamics are shifting as well. Whilst spending on the open exchange will only increase by approximately 3% in 2025, PMP spending is expected to grow by nearly 13%. This trend reflects a growing emphasis on inventory quality and curation, with advertisers increasingly prioritising transparency and brand safety.
Understanding Open Auctions
Open auctions, also known as real-time bidding (RTB), represent the most popular form of programmatic auction where publishers let hundreds of demand partners compete for inventory. Think of it as a digital marketplace where ad impressions are sold to the highest bidder in milliseconds.
The Advantages of Open Auctions
Scale and Reach: Open auctions provide unparalleled access to inventory across thousands of websites and apps. If you're looking to maximise reach and test new audiences, open auctions offer virtually limitless scale.
Cost Efficiency: This is the most cost-effective way to purchase programmatic inventory. The competitive bidding environment often results in lower CPMs, particularly for less competitive audience segments or inventory.
Flexibility: There's no minimum spend or volume commitment. You can adjust budgets, pause campaigns, or pivot strategies instantly based on performance data.
Discovery Opportunities: Open auctions allow advertisers to discover high-performing placements and publishers they might not have considered through direct relationships.
The Drawbacks of Open Auctions
Quality Concerns: Compared to other programmatic channels, open exchanges have a much larger supply of impressions, with this oversupply giving control to buyers and often returning low eCPMs to publishers. For publishers, this means reduced revenue; for advertisers, it can mean variable quality.
Brand Safety Risks: In an open marketplace, your inventory is not only available to varied advertisers but also carries risks of malicious ads. Your brand could potentially appear alongside questionable content without proper safeguards.
Transparency Issues: The open auction environment can be opaque, with multiple intermediaries taking a cut, making it difficult to know exactly where your ads appear and how much of your budget reaches actual media.
Auction Volatility: Prices fluctuate based on competition, making it challenging to predict costs accurately, particularly during high-demand periods.
Decoding Programmatic Guaranteed
Programmatic guaranteed, also known as programmatic direct, represents a hybrid approach that ensures advertisers a fixed amount of inventory at a predetermined price, ensuring availability and predictability. It's essentially a direct deal executed through programmatic pipes.
According to a recent report, programmatic guaranteed helped make up a quarter of all CTV ad buys in 2024, highlighting its growing importance, particularly in premium environments.
The Advantages of Programmatic Guaranteed
Certainty and Predictability: You know exactly what you're getting, where your ads will appear, and how much you'll pay. This makes budget planning and campaign forecasting significantly easier.
Premium Inventory Access: Programmatic guaranteed often provides access to premium placements and publishers that may not be available through open auctions. This is particularly valuable for brand-building campaigns where context matters.
Enhanced Brand Safety: Programmatic guaranteed, PMPs, and preferred deals all ensure a higher level of brand safety for publishers and advertisers compared to open auctions, with advertisers knowing precisely in which type of environment their ads will appear.
Automation Benefits: This is similar to a direct sale or buy, but programmatic automation replaces the manual IO process, improving efficiency and reducing error. You get the benefits of guaranteed inventory without the traditional insertion order hassle.
First-Look Priority: In many cases, programmatic guaranteed deals give you first access to inventory before it enters private marketplaces or open auctions, ensuring you capture the best placements.
The Drawbacks of Programmatic Guaranteed
Higher Costs: Premium inventory and guaranteed delivery come at a premium price. CPMs are typically significantly higher than open auction rates.
Reduced Flexibility: Once you've committed to a deal, you're locked in. If campaign performance isn't meeting expectations, you can't easily pivot or reduce spend without renegotiating terms.
Volume Commitments: Many programmatic guaranteed deals require minimum impression or spend commitments, which can be challenging for smaller advertisers or those testing new strategies.
Limited Scale: You're restricted to the inventory available from specific publishers or within agreed-upon parameters, which may limit your ability to scale campaigns rapidly.
Making the Right Choice: Strategic Considerations
The reality is that most sophisticated advertisers don't choose between programmatic guaranteed and open auctions; they use both strategically. Recent industry research indicates that successful programmatic strategies typically incorporate all three approaches (including private marketplaces).
Choose Open Auctions When:
- You're launching a new campaign and need to test audiences and placements quickly and cost-effectively
- Performance marketing and direct response are your primary objectives, where cost per acquisition matters more than brand context
- You require significant scale and reach across diverse inventory sources
- Budget flexibility is important, and you need the ability to adjust spend dynamically
- You're comfortable implementing robust brand safety tools and monitoring placements actively
Choose Programmatic Guaranteed When:
- Brand safety and premium context are non-negotiable priorities
- You're running a major brand campaign where association with quality publishers matters
- Budget predictability is crucial for financial planning
- You need guaranteed delivery for time-sensitive campaigns or specific events
- You're advertising in competitive categories where premium inventory sells out quickly
- You require specific audience guarantees or demographic targeting that's hard to achieve at scale through open auctions
The Hybrid Approach
Many successful campaigns employ a blended strategy. Use programmatic guaranteed for your core brand-building initiatives and premium placements, whilst leveraging open auctions for performance-driven tactics, retargeting, and audience expansion. This approach allows you to balance brand integrity with cost efficiency and scale.
Consider allocating 60-70% of your budget to programmatic guaranteed for premium environments and brand-suitable contexts, whilst reserving 30-40% for open auction buys that focus on performance and reach objectives. Adjust these ratios based on your specific business goals, category dynamics, and risk tolerance.
The Future Landscape
The programmatic ecosystem continues to evolve rapidly. With the programmatic advertising spending market forecast to increase by $892.7 billion from 2024 to 2029, expanding at a CAGR of 38.1% during the forecast period, the stakes have never been higher for getting your strategy right.
The shift towards quality over quantity is unmistakable. Advertisers are increasingly prioritising transparency, brand safety, and meaningful engagement over pure reach and low CPMs. This trend favours programmatic guaranteed and curated marketplaces, but open auctions remain essential for achieving the scale required in modern digital marketing.
Ultimately, the right choice depends on your specific objectives, budget constraints, brand positioning, and risk appetite. Understanding the strengths and limitations of each approach enables you to craft a programmatic strategy that delivers both short-term performance and long-term brand value.
The most successful advertisers don't ask "which is better?" but rather "how can I use each approach to achieve different objectives within my overall strategy?" By taking this nuanced, strategic view, you'll be well-positioned to navigate the complex programmatic landscape and maximise your advertising investment.