Thought Leadership

Meet your KPIs in a header bidding world

March 19, 2018
By Steve Hulkower

Header bidding is the new normal, and it’s changed the entire ad stack. Today, most standard IAB desktop units are header bidded. And because their winning bids need to be competitive in the final auction, exchanges are moving to first-price auctions for this type of inventory. Most mobile app and video impressions are still sold in a waterfall ad stack, but mobile and video header bidding technologies are currently being developed. As the industry evolves, an ever greater share of budget will be spent on header-bidded, first-price inventory.

What kinds of buying still work in this new advertising age? And what needs to change so you can continue to win in a header bidding world? These are just some of the questions savvy buyers should ask themselves.

Private marketplaces are evolving

Today the value, and utility, of private marketplaces is changing. It’s a good idea to evaluate your PMPs periodically and make sure every PMP deal is helping you achieve your goals. Analyze the data to determine if your PMPs are meeting KPIs, and if they are providing good value for the money. Look at the types of deals you are using. Would that budget be more effectively spent on emerging formats like high-impact units, audio or video? Would a Guaranteed PMP perform better than a standard one? Your Rubicon Project Account Manager can review the performance of your existing PMPs, help you determine how well your strategy is working, and make suggestions to increase the impact of your PMP budget.

Stop overpaying in the auction

Last month, Rubicon Project joined the industry in a move towards first-price auctions, which means buyers are now paying the price they actually bid. If you’re used to the built-in discount of a second-price auction, you might need to change your strategy. Let’s take a look at an example to better explain how things are changing.

In the above example, with a true second-price auction on the top row, you can see that Buyer 3 bid $50, while Buyer 2 bid $10. In a true second-price auction, Buyer 3 would win the impression at a $10 CPM. In a first-price auction, Buyer 3 now wins at $50. But, does Buyer 3 really value that impression at $50? Or is the true value actually closer to $10?

If you are Buyer 3 in the above first price scenario, you need to consider lowering, or “shading,” your bid. Bid-shading means bidding below your true value for an impression. Many DSPs now use bid-shading algorithms to help them bid more effectively in first-price auctions, and the Rubicon Project has introduced a new free feature called EMR (Estimated Market Rate) to assist buyers who don’t have access to a bid-shading algorithm through their DSP. It’s designed to look for opportunities that reduce a buyer’s first-price bid with minimal impact on win rate.

Learn more about EMR: Check out this complete buyers guide to first price auctions

Keeping up with the pace of change can be a challenge for buyers. But new technologies bring new opportunities to reach your audience at scale. Here are a few best practices to make the most of your 2018 programmatic buying:

  1. Use first-price bid strategies:

    Make use of the auction type in the bid stream, otherwise it’s time to start moving towards first-price strategies instead of second-price when determining your maximum bid. Not all deal spend occurs on header bidded inventory today – but the industry is shifting rapidly. Adopting first-price bidding strategies now means you’ll be ready when header bidding gains even more market share.

  2. Compete with bid-shading:

    As we all move to first-price auctions with header bidding, use a bid-shading algorithm, or employ Rubicon Project’s EMR, so you aren’t overpaying in the auction

  3. Curate inventory with PMPs:

    Leverage PMPs to access new and exciting inventory and achieve your media objectives. The Rubicon Project has video, audio, DOOH, mobile and high impact units.

  4. Prioritize your PMPs:

    Prioritization is one tactic that can be employed to help you hit your goals. Use prioritization strategically, and make sure you are actually getting it when you want it. Evaluate your prioritized PMPs to make sure prioritization is the right tactic and, if so, to confirm the publisher is ensuring the overall priority of these deals all the way to the ad server. Strong communication with the publisher is key to making these deals work.

  5. Consider Guaranteed PMPs:

    Guaranteed PMPs are a good way of locking in inventory at a fixed price, ensuring strong access to inventory at committed volumes.

A Rubicon Project Account Manager can sit down with you and your team to fully analyze your PMP strategy, identify what you truly want to set up as a PMP, and review existing deals to make sure that you are not under bidding or over bidding.

Let us help you meet your KPIs in a header bidding world.

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