As an advertiser, one of your primary concerns is to optimize your ad spend while simultaneously achieving your desired results. This is where bid shading comes in. In simple words, bid shading refers to the practice of reducing the amount you bid on an advertising platform to pay less for the same impression. Let’s dive in and explore bid shading in-depth.
Bid shading is a technique that advertisers use in programmatic advertising auctions to reduce their bids on ad impressions while still trying to win the impression. It involves bidding lower than what your maximum amount you are willing to pay for the impression.
There are two types of bid shading techniques:
First-price auction shading involves bidding lower than your maximum amount during the auction. However, if you win, you will pay what you bid.
Second-price auction shading is another technique that advertisers use where they place a lower bid than they intend to spend if they win the auction. However, if they win, they only pay a penny above the second-highest bidder's bid.
Smart bid shading refers to using data algorithms and machine learning techniques to optimize bid adjustments automatically. This means that these automated systems adjust bids based on historical data as well as real-time feedback from a variety of sources such as weather or traffic patterns.
Incremental shading refers to optimizing bids incrementally during an ad auction. This approach allows advertisers to adjust their bids according to real-time performance metrics such as click-through rates or conversion rates.
Bid shading is an effective technique for optimizing programmatic advertising auctions that can help advertisers achieve their desired results while saving money. With proper implementation, this technique can offer valuable insights into campaign performance and ultimately increase ROI.