What is Bid Shading?
The majority of RTB auctions are moving to a true 1st price auction. With a 2nd price auction you can bid your value for the impression, and the auction will ensure you only pay one penny more than the second highest bid. In a 1st price auction, the auction will clear at your winning bid price, and bidding your value for the impression will naturally result in overpaying for some auctions increasing your Average CPM. As such, customers need tools to help bid intelligently into 1st price auctions to reduce Average CPMs while not adversely affecting other goals.
The goal of AIDEM's Bid Shading feature is to reduce your bid price in 1st price auctions while not meaningfully reducing your win rate or significantly changing the profile of inventory you buy.
Bid Shading is not a bidding strategy, but it can be used in conjunction with a bidding strategy, similar to how pacing works.
Common Use Cases
Impression Budget with CTR or Viewability Goal
You may be trying to hit an impression goal with a primary KPI of click through rate or viewability rate. By reducing the Average CPM, you can deliver the same number of impressions at a reduced cost.
Spend Budget with CTR or Viewability Goal
You may be trying to hit a spend goal with a primary KPI of click through rate or viewability rate. By reducing your Average CPM, you can deliver more impressions at the same cost.
Lower Funnel Performance Goal
If you are trying to achieve a cost per action (e.g. web form completion, purchase, app install, etc.), by reducing your Average CPM and obtaining a similar win rate on performant inventory, your CPA/CPI will also go down.
How to Use the Bid Shading Feature
When you select a bid strategy that allows for Bid Shading, you will have an option to enable bid shading on that Line Item using the Bid Shade toggle. All bidding strategies with the exception of CPC will allow bid shading at this time. The default is set to “No”. Once enabled, Bid Shading can always be disabled on the Line Item just like any other bidding feature.
AIDEM DSP will hold out about 10% of the bids as a “control” where we do not bid shade so that you can compare results against the impressions that were bid shaded.
Additional Control for Bid Shading
You have an additional level of control when enabling Bid Shading to decide how aggressively you want us to bid shade.
|Option||What it does|
|More Aggressive||This option will more aggressively bid shade. Customers can expect higher CPM savings with this option, but also a higher reduction in win rate relative to the Control Group|
|Normal (default)||Normal bid shading aggressiveness. This is the default for all Line Items.|
|Less Aggressive||This option will less aggressively bid shade. Customers can expect lower CPM savings with this option, but also a lower reduction in win rate relative to the Control Group|
|Field Name||Values||Log files|
||Bid Logs, Win Logs|
|bid_shade_reduction_micros||Reduction (in micros) that the algorithm reduced your bid price||Bid Logs, Win Logs|
Report Builder Reports
|Performance Report, Bid Performance Report, Inventory Report|
|Bid Shading Fee USD||$ amount in USD||Performance Report|
|Bid Shading Fee||$ amount in the trafficked line item’s currency||Performance Report|
Below are common questions that can be answered about Bid Shading by reporting:
How much did bid shading save me in terms of CPM?
Run a Performance Report and compare your CPM on line item(s) where Bid Shade = Bid Shaded to those where Bid Shade = Control Group. Be sure to filter by auction type = 1st price since bid shading only occurs on 1st price auctions. You must report at the line item level and not anything higher in the hierarchy like Campaign or Advertiser because the aggregation at higher levels may show misleading results.
How much did bid shading reduce my win rate?
Run a Bid Performance Report and compare Win Rate on line item(s) where Bid Shade = Bid Shaded to those where Bid Shade = Control Group.
How was the mix of inventory bought changed by bid shading?
Run an Inventory Report and compare different inventory dimensions on line item(s) where Bid Shade = Bid Shaded to those where Bid Shade = Control Group.
How much did AIDEM bid shade each specific bid?
The bid_shade_reduction_micros in bid logs and win logs will answer this question.
Impact of Supply-Side Bid Shading
Some exchanges have implemented “SSP-side bid shading”, where the SSP shades on behalf of their DSP partners. AIDEM DSP evaluates the performance of said shading on an ongoing basis and has opted into certain exchanges’ bid shading. In these scenarios, our platform will not bid shade, and you will not see a difference between the control and bid shaded impressions on said inventory.
Is Bid Shading available globally?
Is Bid Shading an option on Presets?
No, it is not currently an option on presets.
How is this different from the "Optimized CPM with Pacing" bidding strategy?
The Optimized CPM with Pacing strategy uses a different algorithm to reduce CPM, but it is not as effective as the bid shading feature as it does not optimize for win rate and maintaining a consistent profile of inventory.
How are bid floors taken into account?
Bid shading will not reduce the bid below the bid floor. The algorithm will bid the max of the reduced bid price and the bid floor.
Will deal-based line items allow bid shading?
Deals have their own auction type and can be of type 2nd price, 1st price or Fixed Price. Any deal of type 1st price will apply bid shading, but anything 2nd price or Fixed price will not.
Can bid shading be used on a custom bidding strategy?
Can bid shading be used for Programmatic Guaranteed?
No, bid shading must not be used on Programmatic Guaranteed.
Is reporting for Bid Shading available on the Mobile App and Domain reports?
A: Not currently.
I pulled a report and it is indicating that the shaded bids are clearing at a higher price than the not shaded bids! What's wrong?
It is likely that you pulled a report at a campaign or advertiser level rather than the line item level. Because bid shading is done at the line item level, it is critical to pull this report split by line item and ideally by day or hour as fluctuations in bid volumes and CPMs may cause the reports at the campaign or advertiser level to be misleading.