Setting pricing floors for programmatic auctions can help publishers raise the ceiling of their total ad revenue.
Floors are critical tools for programmatic publishers. And as the Google ad tech antitrust trial showed, tweaking price floors can raise the ire of publishers.
But many publishers don’t know how best to revamp their auction strategies to maximize yield.
At Tuesday’s Prebid Summit, a panel of publisher and pub tech execs shared tips for how publishers can get the most out their flooring strategies. Here are some key takeaways.
1. Start with simple flooring
Publishers first need to understand the basic floor-pricing parameters they can set for different inventory types.
For example, start by setting pricing floors for your site’s basic ad unit and for the devices most commonly used to access your properties, said KiYonna Carr, director of yield management for Yahoo’s owned and operated sites.
Another basic factor to keep in mind is session time, said Scott Kolb, founder of Longitude Ads. Consider different pricing floors for the first impression and for subsequent impressions after the ad slots refresh. For longer session times, track how bid density changes throughout the session and across pages and optimize accordingly.
But the most basic thing publishers should keep in mind is that some SSPs and DSPs – including The Trade Desk, the largest independent DSP – ignore publisher pricing floors.
In those cases, publishers can at least try to keep their SSPs honest, said Phil Bohn, SVP of sales and revenue at Mediavine.
Sometimes, pubs have no choice but to say to their SSPs, “Hey, did you send me a bid below my floor? Stop doing that,” Bohn said. “I’ve been arguing with SSPs for, like, six years to stop doing that, and they still don’t listen.”
2. Pragmatic floor pricing
Price flooring isn’t about predicting exactly at what price a winning bid will clear, Kolb said. Rather, it should protect a publisher’s assets from the “race to the bottom” enabled by bid shading in programmatic auctions, he said.
“We’re not trying to set a $5 floor to get a $5.10 bid,” he said. “We’re trying to preserve the value of the inventory. So the floors might end up being quite a bit lower.”
For example, Longitude Ads might set a $1.50 floor for a publisher, while expecting bids to clear at $3 CPMs, Kolb said.
Bohn affirmed that approach. “A $1.50 floor, where we get a good amount of $3 bids and a whole lot of $1.60 bids, is a great place to be,” he said.
Publishers should think of price floors in three categories, Bohn added. “This is the floor that keeps our lights on, this is the floor where we’re making a profit and this is the floor where this inventory or these users are highly valuable.”
And publishers shouldn’t feel bad about owning their value, he said.
“We’re not looking to price gouge, because we’re publishers – we never get to price gouge,” he joked. “But maximize that floor every single time.”
3. How to use floors in light of increased traffic-shaping from DSPs and SSPs
Having a dynamic floor-pricing strategy is one of the few tools publishers have at their disposal to influence DSPs’ and SSPs’ programmatic bidding algorithms.
“Both SSPs and DSPs are responsive to flooring, and it varies bidder to bidder, but I’ve seen improvement and increased yield from both,” Yahoo’s Carr said.
Setting higher floors will probably result in bidders sending fewer bids, but they will win more often, Longitude’s Kolb said. Monitoring your SSPs’ bid rates and win rates is a good way to measure the success of your flooring strategy.
“The win-rate signal is really important to SSPs in terms of how they shape your traffic,” he said. Since DSPs often don’t look at all traffic, SSPs will only send bid requests for impressions they think the DSP will buy. “If you have a high win rate with an SSP, they’re less likely to throttle you, which means more of your impression opportunities actually go to market.”
Making sure your impressions are actually seen by DSPs is important because most impressions – as many as 90% by some estimates – don’t actually go to market, Kolb added.
However, variance across partners means publishers have to be conscious of how different SSPs and DSPs react to changes in their pricing floors.
“We have to understand which DSPs react to a floor change immediately, which ones take a week, which ones average it out over 30 days and what that does to the win rate,” said Mediavine’s Bohn.
4. Consider a flooring partner
Monitoring how those changes affect multiple partners requires a ton of A/B testing and daily adjustments to dynamic pricing floors, all of the panelists agreed.
That complexity means many publishers will need to work with a monetization partner on their floor-pricing strategy, Carr said.
“There were a lot of things [Yahoo] had to consider in choosing a partner,” Carr said. “How much technical support they were going to provide, how much reporting, how much flexibility we would have to influence the model. And would it be able to do a holistic flooring strategy.”
Another thing Yahoo had to consider was finding a partner that could set dynamic pricing floors for display and video formats, Carr said.
“We have a video app that serves server side, not just client side, with Prebid,” she said. “So our partner integrated a tag through our Prebid module, and we pretty much give them all of our Prebid data, and they use that to analyze and adjust our floors regularly, every day.”
5. Price flooring with Google in the equation
Another thing to keep in mind is whether your ad server honors the pricing floors you set in Prebid, Carr said. Which is a tricky prospect, considering the ad server most publishers rely on – Google Ad Manager – doesn’t integrate with Prebid, she added.
However, the DOJ’s antitrust case concerning Google’s ad tech platform could result in a court decision that compels Google’s ad server or its AdX SSP to play nicer with Prebid.
In the event that AdX starts participating in Prebid auctions as just another SSP, publishers may finally be able to set pricing floors for AdX appropriately, Bohn said.
AdX integrating with Prebid could also level the playing field between SSPs, resulting in other SSPs that have established integrations with Prebid winning more bids, Kolb said.
“Google has always floored one penny higher than whatever your floor is, because they always have the chance to take an impression for a penny more,” he said. “I think they’ll lose a lot more when they’re a bidder, because they’ll be floored the same way everyone else is.”
But an AdX integration with Prebid may not actually be necessary for publishers to exert some control over the yield they see from AdX, Carr suggested. That is, as long as they’re using their own floor-pricing strategy, not Google’s.
“We’ve found that AdX responds very well to our flooring solution at the moment,” she said. “We’ve seen significant lift from not using Google Optimized Floors, just FYI.”
