{"id":13810,"date":"2019-06-10T12:23:06","date_gmt":"2019-06-10T10:23:06","guid":{"rendered":"https:\/\/yieldbird.com\/?p=13810"},"modified":"2024-07-22T19:27:14","modified_gmt":"2024-07-22T17:27:14","slug":"what-is-bid-shading","status":"publish","type":"post","link":"https:\/\/yieldbird.com\/research-hub\/what-is-bid-shading\/","title":{"rendered":"What Is Bid Shading & Why Should You Care?"},"content":{"rendered":"\n

Bid shading<\/strong> is an algorithm responsible for automated bid strategy. It creates an opportunity for buyers to avoid paying too much for ad impressions<\/a>.<\/p>\n\n\n\n

Google recently announced<\/a> its switch from a second-price to a first-price auction<\/a> model. This change is supposed to concern only the space sold by the Ad Manager. At the moment, there will be no changes in the spaces supported by Google Search, AdSense, or YouTube. They will continue to function under old terms.<\/p>\n\n\n\n

AppNexus, Adform & Other SSPs<\/h2>\n\n\n\n
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This is not the first technology to introduce this mechanism. Earlier it was introduced by AppNexus and AdForm, among others. However, Google’s change has caused a major disturbance on the market. Programmatic is still developing and the ecosystem has become very complicated. Many players and auction mechanisms participate in the competition for ad impressions and sometimes make decisions about purchases and sales in an unclear way.<\/p>\n<\/div><\/div>\n\n\n\n

In the world of second-price auctions, it is the publisher that sets the floor price. On the other hand, buyers decide how much they are able to pay for an ad impression, knowing they will pay a lower price as a result of their participation in the auction. A first-price auction makes buyers pay exactly the price they chose when defining their bid strategy.<\/p>\n\n\n\n

Nowadays<\/h3>\n\n\n\n
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Currently, technologies do not provide buyers with many choices regarding the auctions they want to participate in. It makes both groups meet on the market. This, in turn, causes considerable confusion resulting from the lack of consistent logic.<\/p>\n<\/div><\/div>\n\n\n\n

Many technologies are involved in an aggressive approach to the purchase of ad impressions. Theoretically, the highest bid should win. Therefore, for buyers that have not adjusted their strategies to the new auction model, this may mean an increase in the purchase cost.<\/p>\n\n\n\n

Publishers are constantly looking for opportunities to increase their revenue by managing price rules. They analyze individual buyers and their expenditures based on which analytical models of adapting to changing price levels are built, or they invest in teams of specialists that take care of all aspects related to pricing strategies.<\/p>\n\n\n\n

It may seem difficult for a buyer to find a suitable purchase rate among hundreds of websites. However, it is not impossible. Especially when the buyer has a suitable partner who, with the use of technology and advanced analytics, is able to adjust the purchase price to the current market conditions. A solution here will certainly be private deals with a fixed-price guarantee. On the other hand, what if we are looking for the additional potential that auction models provide, and there, the situation changes?<\/p>\n\n\n\n

Bid shading<\/strong> is expected to help with the solution implemented by DSP providers that prevents unnecessarily paying too much – especially in a first-price auction environment.<\/p>\n\n\n\n


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Who does bid shading?<\/h2>\n\n\n\n