Price Management in the Era of First-Price Auction

Our team at Yieldbird specializes in price management for online publishers, maintaining that diligent price management best harnesses sell-side revenue optimization. This approach mirrors best-practice models across a wide range of industries.

When Google announced its First-Price Auction, we were certain that buyers would be reluctant to offer a price reflecting inventory value, since we know for a fact that AdTech people love to optimize. And despite industry claims that recourse to floor prices can only shrink revenues for publishers, we have proved that this is not always the case.

Just to illustrate…

Our R&D team is leading the way with cutting-edge research programs aimed at achieving a deeper understanding of price management.

A recent Yieldbird project focused on the efficiency of inventory price ranges subjected to change in terms of achieved viewability brought us some very interesting insights on the matter of price management.

On the upper part of the graph, we can see rCPM (revenue per 1000 requests) for the same inventory. The colored lines represent the different prices that were tested. The lower part of the graph presents the viewability level related to each price, which proves that viewability was the same for the test group; and that price was the sole differentiator.

We can also see that viewability was very low for the first two weeks, only to subsequently rise to a level of 40%, and then decrease at the tail-end.

Our takeaways…

1. Price doesn’t matter much in terms of low viewability but does so for increased levels.
2. For publishers, the absence of a price management policy may hit revenues to the tune of 30%; and this figure could even increase for inventories of high viewability. Crucially, therefore, proper price management importance grows with the viewability levels.
3. Viewability matters in terms of inventory value – but as we all know, this is nothing new 🙂

The last word…

All things being equal, the First-Price or Second-Price differential is of little consequence when it comes to floor management.

The key takeaway, therefore, is that Publishers can not rely solely on auction outcomes in order to achieve optimal results. They must also take into account both the market price and the seasonal adjustment required for the inventory they manage.