Best Practices: The Move to First-Price Auctions: Part 2, Demand Management
In any significant change to commerce mechanisms, there needs to be a specific work to communicate with buyers to insure they are both aware of the changes and are capable of accommodating the change. In most cases, we recommend working with each buyer to make this move completely transparent.
Get in touch with each buyer to understand their position regarding first-price, exposing the auction model currently held on each one of the SSPs you’re selling your inventory through (in most of them, the OpenRTB field “auction_type” is used to communicate in the ad call whether a first or second-price auction model is being held) We generally see 2 positions:
- Buyers already able to compete in first-price auctions, either using their proprietary bidder (e.g. Criteo, Mediamath), or thanks to their integration with the SSP (e.g. buyers using the AppNexus DSP to buy on AppNexus SSP)
- Buyers that are not adapted to first-pricing yet.
Note that even buyers that are using a bidder able to compete in a first-price auction might be worried about the lack of transparency of such a bidder/algorithm (“black-box” bid shading is usually applied by the DSP). The Bottom line: publishers need to have an explicit discussion with all of thier main buyers to have a clear view of where they stand, how ready they are and how both parties can work together.
For buyers falling in the category of not being adapted to first pricing, and the ones concerned by the note above, one way of bringing transparency on pricing would be to offer fixed priced PMPs. This technique definitely increases transparency and trust levels with buyers, and enables them to keep control of their win rate and prices.
As a side note, PMPs are actually monitored more closely (i.e. at the publisher level) by buyers than the open auction (usually monitored at the SSP level), resulting in increased control for both parties. This is also true in a second-price auction paradigm, but is even more valuable in this unstable environment.
Now, after moving
- Leverage your trading data (i.e. data from your SSPs) to monitor changes in participation, revenue and CPM
- Monitor potential budget transfers between SSPs in your stack (e.g. buyers or campaigns … )
- Get access to market-wide data so you can compare your performance versus other media sellers using both 1st and 2nd price auction mechanisms to ensure your migration is not provoking any abnormal revenue variation versus what is seen on the market.
- Monitor vertical budget transition between open auction and PMP when applicable to make sure your overall yield is not impacted negatively
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Originally published at blog.adomik.com.