Besides the word in-app bidding, you must have heard of programmatic, real-time bidding, header bidding, and unified auction. What is the difference between all of this terminology? What are some other common mobile programmatic related buzzwords you should know?
Last month, we hosted a series of webinars on in-app bidding where we broke down some new terminology that has emerged as in-app bidding has been developed. Before you read this post to learn all the new terminology, you should also be familiar with the following key terms; ad exchange, DSP, SSP, DMP, and agency trading desk, explained in our previous blog post ‘A Crash Course in Programmatic Advertising‘.
Programmatic is the automation of a manual process by using machine learning and algorithms to automate a process such as the buying and selling of ads. Before programmatic, the traditional media buying consisted of paying flat CPM for a set amount of impressions. For mobile performance advertisers, the focus has been on CPI campaigns and the total advertising budget. Traditional media buying doesn’t focus on profiling users, machine learning or dynamic ads targeting.
Real-time bidding (RTB)
RTB which stands for real-time bidding is a programmatic auction setting where the buying and selling of ad impressions happen instantly. The programmatic advertising space commonly uses the openRTB specs defined by the Interactive Advertising Bureau (IAB), which covers a standard set of specific information being passed in the whole chain of ad requests to auctions to auction results.
With the increasing adoption of real-time bidding in the advertising space, header bidding became the concept of selling inventory. The term header bidding as mentioned previously originates from the web and is a programmatic monetization solution that enables all demand partners to bid at the same time. Header bidding on the web is being implemented with a script of code in the header, therefore the name ‘header’ bidding.
It is essentially the same as header bidding, a programmatic monetization solution for mobile apps that enables all demand partners to bid at the same time. However, the implementation is via an SDK integration in the mobile app.
If you’ve heard of in-app bidding, you must have heard of unified auctions as well. Unified auction is a single auction where bids are being placed in parallel and the highest bidder wins.
A relatively new term in the market, emerging right after header bidding, this term refers to a monetization solution which is a hybrid model combining unified auction with real-time bids and the traditional waterfall mediation with predicted eCPMs.
The bid price is the CPM price each bidding demand partner places for a specific impression opportunity.
Clearing price refers to the price that each impression opportunity was sold for in a specific auction. By looking into the difference of the clearing price and the bid price you’ll be able to know if the auction runs on a first-price auction or second-price auction.
First-price auction vs second-price auction
In a first-price auction, the highest bid wins and the bid price equals the clearing price. It is also what the bidding demand partner is committed to paying. In comparison, in a second-price auction, the clearing price is just the second-highest price plus 1 cent.
For example, in the case where four bidding demand partners bid CPM prices of $6.5, $10, $7.5 and $4. If it’s a first-price auction, the clearing price is $10. Whereas if it’s a second-price auction, the demand partner who bid $10 is still the winner of the impression, but the clearing price would be $7.5 + 1 cent. Second-price auction has been the common practice in the programmatic space, but the whole industry is trending towards first-price auctions. A first-price auction provides more transparency for both the advertisers and publishers and more importantly it also gives publishers more yield.
ARPDAU stands for average revenue per daily active user. The calculation is daily revenue divided by the unique active users for that given day.
Why is ARPDAU important? It is important to monitor and measure the effectiveness of your monetization strategy. Since your daily active user numbers fluctuate, measuring the overall revenue for a given day is not fully representative. Calculating ARPDAU will give you a better picture of the impact when you make any changes to your monetization strategy. ARPDAU performance is what you need to monitor before and after adding an in-app bidding solution to your monetization stack.
We recently launched Helium in-app unified auction to help mobile app developers earn more revenue with less work. You can test Helium today together with your current monetization setup, whether it’s in-house mediation or third-party mediation. No technical cost or overhaul of your monetization stack is required to see how Helium can provide you with additional revenue. Get started here.
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