DoubleClick Ad Exchange’s Spencer On New CPM Price Floor Recommendations

Claiming an “average 20% revenue lift for adopted recommendations”, Google’s DoubleClick Ad Exchange announced this week that it was allowing its ad exchange publishers to set price floors as well as the ability to take advantage of new CPM pricing recommendations. Read the blog post.

DoubleClick Ad Exchange’s product management director, Scott Spencer, answered questions about the announcement. Do AdSense publishers get to use Minimum CPM recommendations? Any plans here? They are a part of the DoubleClick Ad Exchange, of course.

SS: Most of the publishers on our Exchange have large, sophisticated sales organizations and are managing inventory across direct and indirect sales channels. So, many of the tools we roll out on Ad Exchange are designed to help them with this process. Minimum CPMs, for example, are a critical tool for managing buyers’ access across the channels, and for allowing publishers to understand how much revenue they might be leaving on the table if their direct sales team wants to sell inventory at a lower rate. Generally, AdSense publishers are dealing with a different set of demands, and the tools we offer them are designed to help meet their specific business needs.

If you’re rolling out pricing recommendations, will you be showing the buy-side on DoubleClick Ad Exchange what you’re recommending to publishers? It might be an interesting feature, no?

Sharing is good… but over-sharing can be bad. We want to ensure buyers always want to bid as high as possible for every impression. If we give the buyer the minimum CPM, they may try to just outbid it by a penny. Likewise, we don’t pass publishers the bids from exchange buyers because then, publishers will set the min CPMs at one penny below those bids. This can increase revenue in the short-term, but buyers would quickly catch on and decrease every subsequent bid until they hit the publisher’s real floor. By giving the right amount of information to optimize in the aggregate, we maintain buyers’ incentive to bid their true value and help publishers fairly value their inventory, benefitting both publishers and buyers over the long term.

OK, but isn’t Google’s AdSense a bidder or Invite Media?  How does Google manage between providing publisher bid recommendations and it’s own buy-side bidders?

We do not provide preferential treatment to any buyer, including our own.

What formats do you provide recommendations for (display, video, mobile, rich media)?

We support all of these formats.

Is there a minimum inventory level and/or history required to provide an accurate recommendation?

We will only provide recommendations where we have enough historical information to accurately predict the effect of different CPMs on publisher’s bottom lines. The amount of this information will vary from publisher to publisher and ad unit to ad unit, as it depends on a number of factors, including the number of bids, impressions, and diversity of buyers’ bids. For ad slots where we have enough data to provide an accurate recommendation, we are now automatically generating these recommendations today for all DoubleClick Ad Exchange publishers. We also generate a graph of the overall revenue and match rate landscape to provide a deeper level of insight into the impact of various floor prices.

By John  Ebbert

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