What is advertising bidding?
It’s a method of ad placement, where the publisher allows advertisers to bid against each other for impressions. What this means is that an advertiser can get his or her ads on targeted websites for less than they would pay. If they bought the ad space directly from the publisher. Websites used this technique, which accepts both traditional and programmatic ad placements.
In a traditional ad placement, an advertiser can purchase the full inventory of a certain publication/website and only pay for actual audience views. In this case, even if no one clicks on the advertisement, the publisher still gets paid. But, this isn’t the case with PPC (Pay per click). Publishers only make money if a user has clicked on an ad, and leads to a conversion. (sale or other action)
Inventory: This term refers to the space where advertising will be placed. Ad types that can be placed include premium, native, and mobile.
Advertisers: The publisher of the website sets a minimum bid for certain inventory before opening it up to advertisers. Once this time frame is over, the highest bidder shows their ad on that particular space.
Publishers: These are the people who create content for a site, blog, or social media account.
How it works and how advertisers can manage their bids:
In a programmatic auction, advertisers generally have two options: Manual & automated!
- In manual bidding, the advertiser will decide how much they’re willing to pay for every 1000 impression. (Also called cost per mille or CPM.) This is usually helpful for advertisers with specific targeting criteria, especially if it’s an exact match. For example, if an advertiser only wants their ads to show up on sites with a particular audience. This is the way to go. But, if they are trying to get more attention for their ad and don’t care about the specific site or demographic. Automated bidding will be better for them.
- Advertisers who decide to use automated bidding can let the system decide how much they need to pay per impression. The system will look at many factors, including click-through rate (CTR), site content and context, device, audience demographics, and more. This information is put into an algorithm that automatically sets a maximum bid for the user.
The benefits this technique offers publishers/websites that run adverts on their site, like more revenue or access to better-quality ads:
- With ad bidding, publishers/websites will get more revenue because they can sell ad space at higher prices than if they did not go with the programmatic route. This is beneficial for publishers who have a lot of inventory and may need to fill it up quickly.
- Higher quality ads: Since advertisers are competing, the end goal will be to create ads that pull in more clicks and views.
- This is beneficial for users who get to see better ads and only the ones they’re likely to engage with. While advertisers can reach their target audience without paying too much while still receiving high CTR.
- Typically, this is a win-win situation.
The downsides of ad bidding:
- One drawback of this system is that advertisers might have to pay too much for impressions. This problem arises because the price an advertiser needs to pay depends on the maximum bid of the second-highest bidder. So, if they’re willing to pay up to $2 per 1,000 impressions, and the next bidder offers that much but no more, they’ll have to pay somewhere between that amount.
- Another downside of ad bidding is that advertisers targeting a specific audience might not get exact matches with individual sites. The reason for this is because the algorithm takes into account many factors, not just the content of the specific site. So, if an advertiser wants to target females between 18 and 35. Who live in California, they might have to broaden their criteria. So that the ad appears on sites with some sort of female demographic and/or audience based in California.
How bidding on mobile ads is different from desktop advertising.
Since mobile ads are different than traditional display ads, it only makes sense that the bid options are also different. Just like regular online ad campaigns, advertisers have two options when it comes to programmatic advertising on mobile devices: CPC or CPI (cost per install).
However, one thing unique about this type of advertising is, that advertisers who choose CPI campaigns only pay when the app is successfully installed onto the user’s phone. CPC campaigns, on the other hand, work like regular CPC advertising, where users only have to click on the ad to start getting charges from their advertisers.
The benefits of using mobile ads with automated bidding:
Since mobile devices are widely popular, many advertisers consider it as an excellent way to get their brand in front of users while they’re on the go and gazing at apps. There are benefits for advertisers and publishers alike when using mobile ads because the ads can be highly targeted and specific. This leads to better ad performances and high conversions for advertisers, while also pleasing users by not bombarding them with ads they aren’t interested in.
In summary, ad bidding is a programmatic advertising technique. That allows advertisers to set bids on the keywords or topics they want their ads to appear for. This results in them having to pay less. Because they’re only competing against other advertisers, who also have their ads associated with those specific keywords/topics.