4 steps to setting up floor prices that drive maximal ad revenues

Posted by Asmaa Bentahar on

Almost a year now, Google has deprecated its Pricing Rules that Publishers used to manage price floors in Google Adx, replacing them with Unified Pricing Rules (UPRs). 

This new feature had deep effects on Publishers’ ad revenues and how they manage their monetization strategies. After almost a year of testing and optimization with our customers, we’ve learned some useful practices that we would like to share with you.

This article aims to provide guidance for a winning pricing strategy to help you keep control over your revenues.

 

STEP 1: Make your floor pricing rules as simple as possible

While it is possible to set up floors in different ways: via UPRs, directly on the SSPs side, per ad size, placement, country, or site, we do not recommend building setups with complex floors as this may lead to contradictory rules.

To illustrate this, let’s take a look at these simple examples:

Example 1

  • SSP1 floor= 1$ 
  • UPR AdX floor= 0,50$

AdX has a competitive advantage over SSP1 since it can win bids between 0,50$ and 1$, where the SSP cannot bid. 

Example 2

  • Leaderboard ATF UPR floor = 1$
  • Leaderboard ATF 250X300  SSP floor = 1$
  • Leaderboard ATF 300X600 SSP floor = 1,50$

This means that AdX can purchase 300×600 impressions at 1$ while the SSP can’t.

It is very common to fall into this type of situation that can cost you lots of money. Which is why we strongly advise to set up simple pricing rules, and NOT to set up rules on the SSP side; this reduces the risk of mistakes and makes it much easier to maintain. 

The second reason why we recommend using UPR floors is that SSP floors are very hard to maintain because publishers do not always have direct access to price floors set up. If you want to change the price floor for a specific SSP, you need to get in touch with your account manager and ask them to do so. Moreover, there is no way to ensure that the partner has implemented the requested change.

Suppose you have 10 SSPs in your header bidding setup and want to unify their floors. In that case, you need to do it one by one, either on the partner’s platform, if possible, or by directly asking your account manager to do so. This can be a cumbersome process, especially if you are in a testing phase to fine-tune your pricing strategy. 

So the most effective and safe way to set up floors is to do it via UPRs, where you can easily access and modify your floors and harmonize them through all your partners.

To finish on floor centralization, we know how hard it is to get rid of all the legacy SSP floors set up years ago and which you don’t even know about. We strongly advise you to check out with your SSPs and remove all the legacy rules that are incompatible with Google UPRs.

STEP 2: Harmonize your floors through all your partners

In case you absolutely want to keep SSP floors, for whatever reason, make sure that they are perfectly harmonized through all your header bidding setup and with your UPR floors. 

First, you need to use the same floors for all your partners in an open bidding setup.

For example, in a Prebid setup where you only have two bidders:

  • SSP 1 floor = 0,20$
  • SSP 2 floor = 0,50$

In this case, SSP 1 can win bids with no competition. It can buy impressions between 0,20$ and 0,50$. 

Let’s take a look at the following scenario: 

  • SSP 1 bid= 0,25$ (higher than its floor) 
  • SSP 2 bid= 0,40$ (lower than its floor)

The flooring rule prevails, SSP 1 wins the bid, and you lose 0,15$.

This is why it is essential to unify your floors within your header bidding setup.

Once you’ve harmonized floors through all your HB partners, you need to replicate the same values on the UPR side. It is entirely useless to set a UPR at 0,10$ and an SSP floor at 0,30$; this implies that you allow AdX to buy inventory without competition between 0,10$ to 0,30$.

Google being brilliant as a bidder, would buy a huge part of your inventory between 0,10$ and 0,30$. Flooring Google without replicating the same floors on the SSP side is a bad practice that could cost you considerable money.

To sum up, if you still want to have floors on both sides, you need to harmonize your floors through all your header bidding partners and then replicate the same values on the UPRs side.

 

STEP 3: Setup Hard CPMs not Target CPMs

Traditionally, AdX Pricing Rules were hard price floors. Therefore, an advertiser’s bid must be higher than a floor to win the impression. However, when you enable Target CPM for a pricing rule (0,50$, for example), Google will adjust the floor price to match more bids while keeping your inventory’s eCPM at least equal to  0,50$.

Let’s imagine a scenario where you still have floors on the SSPs side and where you set up a Target CPM for Google at 0,50$ and the same value as a hard CPM for SSP floors. In this specific case, you prevent your header bidding partners from buying for less than 0,50$, and you allow Google to buy for less than 0,50$, which is total nonsense in terms of competition.

If you are using target CPMs, you create situations where your Google floors are lower than your header bidding floors, and this is far from being optimal in terms of competition, as Google has just no competition on price bands lower than SSPs floors.

This is why we strongly recommend that you stick with hard floors and drop the target floors.

STEP 4: If you use floor prices then do not try to backfill your remnant inventory with third party ad networks

If all your display inventory is floored at 1$ it is expected that a part of your inventory will not sell.

You just need to monitor this remnant inventory and lower your price floors if it is too high, what you should avoid doing on the other hand, is selling this inventory to third party ad networks with no floors. As these ad networks, will sell your inventory to the same DSP with a margin.

It is useless to price an impression at 1$ at the beginning of the chain to let it go for 0,10$ at the end of the chain, knowing that you have the same buyers. 

Backfilling is not the best solution; if your inventory does not sell enough, consider lowering your floors. If it sells too much, consider increasing them and adjust until you hit the sweet spot instead of sacrificing it for nothing.

Conclusion

To sum it up, ad ops teams need to stop twisting their brain over complex floor pricing strategies. During our experience, we’ve seen so many teams spend huge amounts of time creating and managing very complex flooring rules, with sizes, SSPs, geos, placement, etc.

These strategies may make sense theoretically, but they are often underperforming from a practical point of view, in addition to increasing the risk of making mistakes and losing money.

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