If you're involved in the world of digital marketing and advertising, you've likely come across the term "reserve price". But what exactly is it, and why does it matter? In this post, we'll explore the ins and outs of reserve price in ad tech and shed some light on the most popular questions surrounding this topic.
A reserve price is the minimum price that an advertiser is willing to pay for an ad impression in a real-time bidding (RTB) auction. It's essentially a floor price that sets the baseline for what an advertiser is willing to spend to reach their target audience.
In RTB auctions, multiple advertisers bid on the same ad impression in real-time. The highest bidder wins the auction, but only pays one cent more than the second-highest bid. The reserve price is set by the publisher or ad exchange, and it ensures that bids below a certain threshold are rejected.
Reserve price is important because it allows publishers and ad exchanges to ensure that they're receiving a fair price for their ad inventory. Without a reserve price, advertisers could potentially win auctions with bids that are much lower than the true value of the impression.
Advertisers typically set reserve prices based on their campaign goals and budget constraints. For example, if an advertiser has a limited budget but still wants to reach a specific audience segment, they may set a higher reserve price to increase their chances of winning auctions for impressions that match their criteria.
In video marketing, reserve prices can be particularly important because video ads tend to be more expensive than other types of ads. By setting a higher reserve price, advertisers can ensure that they're only bidding on high-quality video impressions that are more likely to result in a conversion.
As technology continues to evolve, it's likely that reserve prices will become more sophisticated and dynamic. Advertisers may be able to set reserve prices based on more granular targeting criteria or even use AI to optimize their bids in real-time.
