Great question, and I am sure there will be 3 groups, one would say targeted CPM, another group will say floor and third one would say combination of both, let’s go.
When targeted CPM was introduced by Google, my first question was “When we set the floor using targeted CPM, what is the lowest bid would be accepted below the set floor? The answer was it is few cents up to 10% less. To simplify it, if you set the floor at 1$, you will still accept 0.99 – 0.98 – 0.97 – 0.96 – 0.95 …, then I said it is fine sure let’s use it and have little bit higher fill and uplift in revenue, thereafter yes I saw increase around 10% in revenue, heeeeyyyy great everyone is happy.
What is shocking is when you look at the pricing rules score card and you look at the bids buckets and you could see that it is accepting all bids starting from 0.01 all the way up. WHAT? can you imagine you set a floor at 1$ and you are still accepting 0.01?
One of the questions I hear all the time:
- Why when we change the floor, we see little drop at the beginning (which is normal when you change floor) then we see uplift in revenue for a while, then again revenue is almost same like before, maybe slightly higher.
My answer to this question is that you are giving the control to the machines to decide on your behalf at what price your starting auction should be. I am sure that you have heard of “Bid Shading”.
Then shall I use fixed floor? if you ask me personally, I would say yes, but it is ofcourse up to you and your pricing strategy. You may also use hybrid of both fixed floor and targeted cpm, how?
First check pricing rules score card, search for your floor and see the bids buckets then decide where do you want the cut off to be.
Let’s set a floor of 1$ for USA:
– We will need to create two pricing rules for USA
– Create Pricing Rule 1: use targeted cpm at 1$
– Create Pricing Rule 2: use floor cpm at 0.50$
What am I doing in this case? I am accepting bids below 1$ all the way down to 0.50$ but NOT below 0.50$.
After 7 days, you can you can use the floor assistant widget to evaluate your set floor and adjust accordingly.
You could say, let me then increase my target cpm so the machine will optimise toward higher bids, if you are using Google only, I would say this is fine, but when you are using other SSPs via Prebid and Amazon, then the targeted cpm will affect the line items below the floor you set which will cause revenue loss across your SSPs.
I hope that this was useful information for you, if you have any question, please do not hesitate to ask.