With the industry’s recent move to first price auctions, you may be wondering what this transition means for price floors. Sharethrough has transitioned to nearly 100% first price auctions. In a first price auction, floors no longer influence the clearing price directly and price reduction no longer exists. While a first price auction alters the economics of floors, Sharethrough strongly believes floors are still very valuable.
Why are floors still important in a first price world?
Floors should be used to help set fair prices for your inventory and protect against buy-side optimizations that might drive revenue down over time. You may also wish to maintain price floors in relation to your direct-sell and other products. With the shift from second to first price auctions, DSPs are focused on their bid shading algorithms. With bid shading, DSPs/buyers reduce their bid as much as possible to minimize the price they pay without significantly impacting their win rate. Setting floors too low in a non-competitive environment might encourage buyers to send low bids to see how cheap they can buy certain inventory.
How can you set your floors?
Sharethrough will continue to set smart floors for you with the goal of setting fair prices for your inventory to maximize yield, if you authorize us to do so via our Smart Floors feature. We are continually monitoring marketplace dynamics and the impact of these new auction mechanics to ensure our algorithm is setting the most optimal floor prices. The industry has not really settled into the best way to determine floor prices in first price so we expect this evolve as the landscape changes.
As an exchange, Sharethrough does not bid shade. We are working closely with our DSPs to better understand their bid shading algorithms and are focused on helping them understand the value of your inventory.
Feel free to reach out to your account manager if you want to enable or disable Smart Floors. For those publishers that wish to set your own floors, you have a couple of options:
- Log into the Sharethrough for Publishers platform to set floors for your individual placements
- You can also pass us floors with every impression request through your various supply integration*
*Passing bid floors in not supported if you are integrated with Index