Floor prices, from an academic standpoint, are there to protect the base value the publisher has placed on the inventory. Bids falling below the floor, or reserve, are usually rejected by the exchange. Losing bid information might be recorded to give the publisher insight on the value advertisers are placing on the inventory and accompanying traffic. Next: Price Floor Discovery
Your eyeballs are on the block, but they don’t always go to the highest bidder.
“In RTB, will the bid with the highest CPM always win? If not, what are the other factors?”
This question was asked on quora, below is my answer.
In a pure auction, the highest bid should always win. In many cases an RTB auction ends with this result, but not always. There are two or three things that will adjust the auction mechanics to give a lower bidder the impression. Most of the time a modified auction is at the behest of the publisher. Read more
The year was 2008. Social media was just ramping up. Twitter was an infant and people were still wondering why Google bought YouTube. MySpace was starting to wither under News Corp and Facebook was on the rise to supplant it. Read more
One of the more interesting decisions I’ve made was buying into the blueberry farm. It came about “innocently” enough. My brother and father conspired to pitch an investment opportunity in the form of blueberries.
By 2006 the business was humming along. We had several clients and were expanding into other opportunities. There was a substantial surplus of cash that we opted to take out of the business. This allowed me to pursue other ventures, like farming. Internet technology and farming go hand in hand, right? Read more
When multiple advertisers are bidding for a certain (impression) and more than 1 enter the same bid amount, (each) being the highest, how does the RTB (auction) determine which ad should be displayed.
This question was asked on quora, below is my answer.
Identical bids are not unheard of, but they are rare. Bid prices are presented as a CPM value with up to five decimal places. That means that the actual impression can bid upon with precision down to eight decimal places. So in that rare event, when there are two or more matching top bids, the winner is chosen at random. This is only the tip of the iceberg, though.
Features are being added to RTB systems that allow for preferential treatment of preferred DSPs, agencies, trading desks and even advertisers. Deals that are struck between site owners and buyers are being executed through the RTB infrastructure. Those deals can supersede standard auction mechanics, resulting in a winning ad from a preferred partner in the presence of matching (or higher) bids from other parties.
As time goes on and the RTB system is exploited for more and more features, having equal footing in an auction will be more rare, relatively speaking. There will always be general auctions where no bids are given special consideration. We are, however, entering an era where premium inventory is available to buyers through RTB. With that inventory comes a more carefully crafted environment to buy and sell.
