Ad Exchange Price Floors Optimization

If you’re reading this article, then you should be more or less familiar with Google Ad Exchange. Publishers conducting Ad Exchange (AdX) will most likely already know that it’s one of the greatest ad partners to get in a site’s ad stack.

However, plenty of networks and exchanges (including Google ) use second price auctions to ascertain the winning price for every impression.

The winning bidder at the market pays 1 cent more than the next highest bidder.

Consider the example below:

Bid B $1.20

Bid C = $.75

Winning Bid ( Bidder A ) will only pay $1.21, which is one cent higher than Bidder B’s bid.

This is where price floors become involved. If the price floor set is at $2.00, then Bidder A would shut out the price at $2.01. Applied effectively, this would result in considerable gains to a publisher’s revenue.

You can set up pricing floors in a couple of various ways, all depending on your strategy or the way you want them executed on the site’s ad inventory.

Setting pricing flooring according to geographical locations, device types or even per individual ad unit is possible if that’s what you prefer.

There’s a catch though. While this would mean an increase of CPM/revenue from the market where the winning bid is above the price floor and the next winning bid is below it, price floors also serve as a barrier.

Every single bid that may not get to the price floor, even if it was the greatest, would be ignored. While undeniably helpful in increasing ad revenues, price floor application is a strategy that requires attention and can be very costly if not handled well.

SETTING PRICING/BLOCKING FOR Certain BUYERS OR ADVERTISERS

In Open Auction Pricing rules, publishers can block an advertiser/buyer from serving on their sites or a for specific ad inventory.

For example:

The publisher can block the advertiser’A’ from serving ads on their travel page URL.

Publishers can also set a particular floor price for a particular advertiser/buyer.

By way of instance, publisher A has a deal with advertiser B to buy inventory at $3 CPM as a campaign in DFP but sees advertiser B purchase impressions at $1.50 through AdX.

Branding allows publishers to set different minimum CPMs for their inventory. When a publisher sets up a branded minimal CPM, buyers that are targeting their domains will need to bid at least that minimum CPM to compete in the auction to get their inventory.

Each sort of branding option provides various levels of information to buyers. This information is contained in the bid request.

Branded: Buyers see the entire path/URL of this publisher’s domain where their ad will be displayed. Example: https://weather.com/en-IN/weather/radar/interactive/

Semi-transparent: Buyers will see the top notch domain of the publisher’s site. The exact place, where their ad will be served isn’t revealed. Example: https://weather.com/

Anonymous: Buyers will not have any information regarding where their ads are going to be served.

SELECTIVE PRICING (OPTION TO BLOCK A SPECIFIC ADVERTISER OR A BUYER):

Before we dive into the Subject of pricing, let us know what do the terms advertiser, buyer, and manufacturer signify in the context of Ad Exchange:

Brand: Every advertiser (parent company) may have diversified portfolios with many modest verticals or subsidiaries.
Buyer: These entities represent/partner with advertisers to mediate the buying of various publisher’s inventory.

THERE ARE TWO WAYS OF SETTING UP A PRICING RULE:

Set pricing and blocking for everybody

Publishers can enable this if they would like to sell inventory at the same price to all advertisers and buyers.

This approach can also be used to block all ads from working on particular inventory, by blocking all of the branding types.

Establish pricing and blocking for specific buyers, advertisers, and brands

Publishers can enable this if they want to sell his inventory in a different price to one or a set of advertisers and buyers.

This approach can also be used to block all ads from a single or set of advertisers/buyers from serving on specific inventory, by blocking all the branding types.

PRIORITIZATION:

  • Rules that follow prioritization are:
  • Open Auction Pricing Rule
  • First Look Pricing
  • Flexible Sizes
  • Ad Styles and Backup Ads

What’s prioritization?

If we’ve got multiple rules made in an Open Auction Pricing rule targeting the exact same inventory, the ad request will serve through the first rule and will not check the following rules, even with the identical targeting.

What might have gone wrong here?

Firstly, confirm whether the publisher has blocked advertiser A in the first rule in Open Auction pricing rules.

If the Publisher has blocked advertiser A and put this rule at position 5, where he has many other rules created, there’s a possibility that advertiser A’s ads are serving through some of the rules from 1 to 4, that does not have”A” blocked. To make sure Advertiser A does not display on the publisher’s site, the 5th rule’s priority ought to be set to 1.

If priorities are correctly set, check if”A” is blocked to serve through”All Buyers” in the priority 1 Open Auction rule.

If the publisher blocks”A” coming through a particular buyer case”DBM,” there is a possibility for advertiser A to come through other buyers.

TIPS ON SETTING UP PRICING RULES:

Always try to keep the pricing rules setup minimal, as a intricate rule hierarchy is hard to handle and optimize.

Try not to change the flooring prices drastically, always increase/ reduce them gradually and give sufficient buffer time to analyze the effect of the change.

The flooring prices in the”Default principle” should not be very high, since this will be the final chance to market a request.

Segment inventory (desktop, mobile, geographical location, viewability score, etc.) based on historic performance and set pricing for each section of your inventory based on its perceived value.

If there are a number of rules created with the identical targeting, the ad will function through the rule that has the topmost priority.

Blocking too many advertisers will cause a drop in matched requests.
When the floor price is set very high, advertisers can refrain from bidding and may result in a lesser coverage or fill. The publisher will wind up getting no ads serving on his sites. The key is to find that balance that gives you a solid quantity of coverage while maintaining ideal or high prices.

If Ad Exchange is set to Dynamic allocation in DFP and there are other third-party ad networks operating on exactly the same ad units, these third-party ad networks will compete for the residual impressions, which AdX was not able to fill.

You may create price floors and broaden its targeting by using specific geographical place or devices (very useful when you’ve got a lot of ad units) or you may create a floor for every individual ad unit in your inventory. This requires somewhat more manual work especially if your site includes multiple ad units or placements.

Granular inventory targeting ought to be prioritized, and general targeting should be at the bottom.

When your pricing rules are targeted per ad unit, focus on the best-performing ones or the ones bringing in the highest number of impressions when adjusting the floors.

TIPS ON SETTING UP OF BLOCKING RULES:

Avoid blocking entire top notch categories, if possible, block subcategories to have a minimal drop in accessible demand.

It is a much better approach to always block the advertiser URLs rather than using category blocks.

For wider blocks remove any prefixes in the top-level domain (E.g., abc.com instead of www.abc.com)

When allowing sensitive categories, which can be blocked by default, ensure compliance with the geographic location where your ads might serve.

This is a feature which enables the publisher optimize their revenue by using Opportunities and Experiments.

Opportunities: are projections based on the preceding seven days of data for your network. When you apply a change of a specific blocking or pricing rule, the proposed changes are implemented straight away.

Experiments: allow you to apply the proposed changes to some predetermined part of your traffic and compare the results to a control group where the rule changes have not been used. You can view the impact on your revenue without changing all your inventory.

CONCLUSION

Begin by implementing our optimization tips and optimizing your Ad Exchange price floors as we advocate in this report. If you would also like input from our team of ad optimization experts, go ahead and fill out your details here so we can help you with your price floor strategy

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