As every major exchange has switched to first-price auction, in which the winner pays precisely the amount that he or she bid, bid shading is being used more and more as a technique to avoid paying too much. Our MediaMath Product Lead Sara Skrmetti was interviewed by AdExchanger last week on our take on the practice. Skrmetti drove home the point that MediaMath wants both DSPs and SSPs to take a collaborative approach to bid shading.
“Two-way data sharing [will] make both shading solutions smarter and complementary,” she said. “If we work separately and don’t inform one another’s approaches, we might end up negatively affecting advertisers’ performance, so this two-way communication is critical.”
As Skrmetti explained it, if an exchange aggressively bid shades when an advertiser wants a high win rate, the advertiser will be negatively impacted by that higher loss rate.
To find out more about our take on bid shading, download our whitepaper on the industry shift to first-price auctions.