Questions to Ask when Evaluating A Unified Auction Solution
In our previous blog post, we shared how in-app unified auctions are beneficial for both app developers and advertisers. In this blog post, we’ll take a deeper dive into crucial elements of in-app unified auctions, and key differences among the various solutions.
Hard Bids vs Soft Bids: Is the auction based on real-time bidding?
Maximizing yield is one of the most important benefits of in-app unified auctions. This benefit relies on participating demand partners all bidding in real-time. Whoever bids the highest CPM price wins the auction, and commits to paying the bid price to the publisher. We use the term “hard bids” to refer to this type of real-time bid.
However, there are some unified auction solutions on the market that either use average historical CPM for non-programmatic ad networks or allow them to use predicted CPM in auctions. A soft bid refers to the average historical CPM or predicted CPM provided by non-programmatic ad networks that is being used in auctions. If the historical CPM or predicted CPM bid wins, the solution provider doesn’t necessarily hold the winning CPM bid responsible for the final payout price. In other words, in soft bidding systems a bidder can win with a high bid, then pay you, the publisher, a lower price — hurting ad revenue. The publisher relies on the accuracy of the prediction for soft bids to work, but this doesn’t work at scale with multiple partners who have proprietary prediction systems.
Why do header bidding solutions allow soft bids? It’s because many ad networks don’t have the capability to bid in real-time yet. However, the soft bid solution intends to present the appearance of many demand partners participating in the auction, regardless of bid efficiency, so it enables ad networks that usually work with advertisers on a CPI basis to participate. In the case of non-programmatic ad networks using average historical CPM in auctions, this process does not precisely represent these ad networks’ current value for the advertising inventory. This type of soft bid is also assigning the same value for all the impressions coming from a participating app for a given country and ad format, and not ascribing higher value to a certain segment of high quality users for the publisher. In the case of the solution provider allowing non-programmatic ad networks to use predicted CPM in auctions, the CPI to CPM prediction is not accurate in many cases. The platform is transferring the risk of these ad networks’ inaccurate prediction to the publisher side and reducing the potential for publishers to maximize yield through these in-app unified auctions.
To illustrate, let’s imagine a scenario where network A has real-time bidding capability and bids $10 CPM for this bid request; but network B can’t bid in real-time, so the in-app header bidding solution provider uses the historical data of $12 CPM for network B in the auction. However, the final eCPM could turn out to be $8 for network B based on the CPI performance for this ad. In this case, Network B would win the auction and pay the publisher only $8 eCPM, but the publisher could have been paid $10 eCPM by network A if no soft bids were allowed in the auction. Therefore publishers should always pay extra attention to the bid and auction mechanisms when comparing different in-app unified auction solutions. The key is to ensure you understand whom the buyers are, what they are capable of, and how the auction runs to help ensure you maximize earnings.
True Unified Auctions vs Hybrid with Waterfall: Is it still waterfall mediation?
True in-app unified auctions are a flattened ad request and auction system. This contrasts with mediation waterfalls, which rely on sequential ad requests. Unfortunately, there are some solutions that mix unified auctions with the mediation waterfall approach. Instead of running unified auctions for all ad requests, these “hybrid” solutions place unified auctions in specific waterfall positions or line items. It might be an easy sell to publishers to adopt this new solution. However, the part of the inventory that has a higher waterfall position is still being sold in the form of direct deals or in order of priority in the waterfall, which is not maximizing efficiency.
From the buyers’ perspective, when they receive ad requests through this type of hybrid system, they won’t see optimal performance from their ad buying. Thus, they are not going to pay a premium CPM price in programmatic bidding. This can hurt publishers’ ad earnings. Thus, it’s important to confirm how the new solution is structured, and to determine whether it is truly a unified auction.
Transparent Pricing vs Hidden Fees: Are you getting paid what you earned?
If you are a publisher, make sure you’re aware of all pricing and that there are no hidden fees. Any hidden or obscured demand side fees could negatively impact participating demand partners’ bidding efficiency, and further reduce your ad revenue. In addition, if there are any hidden supply side fees, these simply net moread revenue out of your pocket without your knowledge. If you’re considering any specific in-app unified auctions, you should confirm whether you or the demand partners are getting charged with any fee and how much.
Besides pricing awareness, you should also fully utilize the data reporting and analytics provided by the unified auctions platform. Products with transparent pricing and auctions will be capable of showing you auction data, demand partners’ ad spend, and publishers’ earnings. You can use this information to help determine whether you’re maximizing earnings.
While there are many benefits to in-app unified auctions, publishers should be prepared to carefully evaluate and explore header bidding solutions.
What are the things to watch out for in current unified auction solutions?
- Hard Bids vs. Soft Bids
- True Unified Auctions vs Mixed with Waterfall
- Transparent Pricing vs Hidden Fees
Stay tuned for our next post in this series, which will reveal the results from our recent publisher survey on in-app unified auctions!