How Do Dynamic Price Floors Allow Publishers to Increase Revenues by up to 40%?

Dynamic pricing is one of the hottest topics in the programmatic world. In parallel with the launch of Google’s new pricing option, “Optimized Floor Prices,” we unveiled our new product, Opti Yield, whose first flagship innovation is an optimized dynamic floor price technology that is already offering outstanding results. Why should you choose a dynamic price floor solution and how does Opti Digital’s offer stand out in the market?

Adapt the Price Floor to Surrounding Factors

Dynamic Price Floors by Opti Digital is a process for selling ads that involves setting a minimum price for your inventory and then automatically adjusting this price depending on certain factors. Unlike static price floors, this intelligent technology combines several advantages.

Firstly, it takes into account historical demand bid data of demand partners and adjusts price floors automatically, day by day, and hour by hour. By implementing dynamic price floors, publishers make sure that SSPs bid a minimum price in relation to the previous offers. 

More than bid history, this technology also adjusts the price of a publisher’s inventories according to the inventories: pages, placement, ad size, etc. For example, in-read ads are very qualitative and usually have a 70% viewability rate. Our algorithm will adjust the price floor based on this information. The user’s browsing history is also an element that feeds our algorithm: The more cookies there are in a browser, the better the targeting capabilities for the buyer who will pay more for a highly qualified user target.

While these adjustments can also be made manually, using a technology based on machine learning not only saves precious time but also avoids human error in data analysis and a lack of reactivity in case of a sudden change in the above conditions.

Seek Transparency to Challenge Competition

Today, few companies offering this technology are capable of managing such an algorithm and pushing it to SSPs through Prebid and to Google Ad Manager. However, not communicating the price floor to the wrapper client-side represents a real loss of revenue for publishers. That’s why at Opti Digital, we have chosen to offer a holistic technology that communicates price floors in the bid request to all connected marketplaces.

To better understand what this means in terms of profitability, let’s take a look at the following two examples:

Example 1 — With General Price Floors Used in Header Bidding

A static floor price of $1.4 is set in Google Ad Manager. However, when publishers sell an ad unit in Header Bidding, they could receive a bid of $1.3 through Prebid, as the price floor set in Google Ad Manager is not visible to all SSPs connected in Header bidding. The Prebid winning bid is then submitted to Google. In parallel, Google Ad Manager is informed of the $1.4 floor price and can bid accordingly, most likely $1.5. It penalizes the SSPs connected in Prebid until their bidding algorithms find the floor level, and gives the advantage to Google.

Example 2 — With Opti Digitals Dynamic Price Floors Used in Header Bidding

Opti Digital’s dynamic price floor technology sets a price floor according to several conditions. When the price floor is set, the information is directly communicated to the SSPs through Prebid. So if the floor price is set at $1.4, it is very likely that the SSPs will bid $1.5. This winning bid is then submitted to Google Ad Manager, which, if interested, will outbid at $1.6. 

In the second example, publishers will receive an offer at $1.6 instead of $1.5 due to competition of Prebid against Google.

Watch Your Ad Request Net eCMP Increase 

When implementing this technology on a publisher’s site, Opti Digital systematically performs A/B tests on smaller traffic in order to identify the average uplift and propose it to a larger audience (up to 85%) afterward.

In January 2022, we ran an A/B test on a web page of a media publisher in Europe. We tested our dynamic price floor solution on 30% of its traffic to see how it affected its net ad request eCPM. Here are the results we observed on a specific ad placement:

Dynamic Price Floors

In the first graph, you observe an average unsold rate of 0.11% in January, for an ad request eCPM (in the above graph, the clear violet line called “inventaire eCPM”) of $1.76. In the second graph, the unfilled rate is higher (2.98% on average), but the average ad request eCPM is better: $2.05, an increase of nearly 17%.

Dynamic floor price optimization is a general approach that adapts to complex market constraints and makes it possible to seize different opportunities throughout the year. The Opti Yield technology offered by Opti Digital goes even further, as it boosts the level of competition between Prebid, Amazon, and Google Ad Exchange. Through this transparency, Opti Digital is also preparing for the implementation of the future regulation, the “Digital Services Act,” which should come into effect in 2024. One of the main missions of this act is to make platforms more transparent; for example, they will have to explain how their algorithms work for targeting advertising.

To learn more about our solution, feel free to reach out to one of our experts.

Why do your advertising revenues drop every year in January, July and August?

Summer is here, the most frightening period for publishers, just like January. The reason? A drop in eCPMs and poor overall advertising performance. This yearly phenomenon is common to all publishers. There are several reasons why… Find out in this article and learn how to overcome them by implementing some good practices.

Why do we see a drop in advertising performance at certain times?

Every year, the same thing happens. The advertising statistics for January, July and August raise hackles. Here are the main explanations:

  • Fewer purchase intentions and advertising campaigns at the beginning of the year. 

After the fourth quarter, users’ purchase intentions decrease and e-commerce sites record less visits.

Due to this drop in traffic, most advertisers are significantly reducing their participation in auctions. Indeed, they tend to moderate their spending and be more cautious with their advertising budget at the beginning of the year, which results in lower eCPMs.

  • Summer break. 

In July and August, users slow down their web browsing to take full advantage of their summer holiday. Another reason for the drop in summer revenue is that budgets are sometimes reviewed at the beginning of the semester. July corresponds to the start of the 2ᵉ semester when advertisers budget is more spread out over the last quarter. 

Other, more specific, reasons for a drop in audience and revenue may include:

  • Inflation. 
  • The geopolitical context (The war between Russia and Ukraine since February 2022).
  • An increase in negative consents in 2022 vs. 2021 with the implementation of the new CMP format (“reject all” or “continue without accepting” options on the first screen of the CMP). However, comparisons between these two years should be made with caution. Q2 2021 was an exceptional period of post-lockdown recovery. 

How to minimize this drop?

To compensate for this decline, there are several techniques you can use:

  • Adopt the right floor price strategy. 

Since advertiser demand is stronger in the fourth quarter, we recommend increasing floor prices for this period. On the other hand, it is better to reduce them in January. 

Rather than doing this manually, we recommend implementing an automatic strategy. Our dynamic floor price optimization technology adjusts floor prices based on seasonality and a wide range of criteria calculated with AI. This strategy allows maintaining a good level of revenue for publishers and offers transparency to SSPs since the floor price is communicated to all marketplaces before the auction. 

To go further: discover Opti Yield, a solution that dynamically optimizes your ad yield.

  • Optimize your advertising inventories. 

You can, for example, offer formats with high eCPMs such as sticky bottom or sticky top formats and interstitials. 

We also recommend that you choose an automatic advertising insertion feature on your pages that host long content so that you don’t forget to monetize certain inventories. 

  • Improve your SEO and viewability rate. 

Optimize your site so that it loads quickly and is well indexed in the SERPs in order to gain traffic and therefore, additional income. We also advise you to improve the viewability of the ads thanks to lazy loading for example, in order to increase the loading speed of your site and obtain a better fill rate. Indeed, advertisers prefer to invest in an inventory with a high viewability rate, above 70%. 

  • Take advantage of the best performing months

June, October, November and December are the months when advertisers concentrate their ad expenses (increased traffic before the summer vacations, Black Friday, Thanksgiving in the United States and Christmas). This is why ad revenue is usually higher in the 2ᵉ and 4ᵉ quarters as traffic and user engagement increases. Maximizing your revenue in these months can help compensate for lower revenue in January, July and August. 

At Opti Digital, we constantly follow up with the advertising performance of our publishers via our dashboard, and we systematically check that our setup remains optimal. Our dynamic price floor optimization, automatic content insertion and intelligent ad refresh technologies are able to compensate for seasonal revenue drops.

If you have any questions about our products and support, contact us 😊