What Is Bid Shading?

AdTech Industry Definitions
Last updated: July 12, 2019 | by Kean Graham
What is bid shading

This post was most recently updated on July 12th, 2019

Advertisers use bid shading algorithms to help them pay less for impressions. As a result, publishers take the hit with lower CPMs. Find out how bid shading originated, how much advertisers are really saving and what publishers can do to combat the effects of bid shading.

Subscribe to our YouTube channel for weekly video updates!

Video transcription

Buyers are using bid shading to avoid overpaying in first-price auctions.

It has become increasingly popular as exchanges switched to first-price auctions.

DSPs & Exchanges look at historical winning bids and try to figure out the 2nd price so they can submit a bid without decreasing their chances of winning the auction.

Bid shading algorithms look at a variety of factors such as the publisher, the ad placement,, exchange dynamics and more.

Leading DSPs & SSPs offer bid shading solutions.

These include Google’s free tool called DV360, MediaMath, PubMatic, The Trade Desk and more.

The Trade Desk’s tool, KOA, charges buyers a percentage of how much they save them on bids.

On average buyers save 20% on bids through bid shading programs.

Although it’s great for buyers, publishers end up taking the hit.

Before bid shading became popular, buyers weren’t sure if they were bidding into first price or second price auctions.

This initially created a large revenue lift for publishers, but advertisers weren’t happy with the bid rates in this new first price auction environment.

With bid shading, many publishers are seeing their CPMs return to 2nd price auction levels.

If bid shading algorithms improve, CPMs could continue to decrease for publishers.

One way publishers are counteracting bid shading is with intelligent price floors.

Price flooring is where a publisher also analyzes the bid history of their auctions and makes an intelligent suggestion for the starting bid.

Talk to MonetizeMore about our Intelligent Price Floor Solution to protect your CPMs.

Source: https://adexchanger.com/online-advertising/everything-you-need-to-know-about-bid-shading/

Ad Ops Tips & Guides, Industry News, Latest Tech and Success Stories - right in your inbox.

We are committed to protecting you Privacy Data

Here’s the course that 300+ pubs used to scale their ad revenue.

Enroll today

Book Banner

"Working with MonetizeMore has been a transformative experience as they helped to increase my overall revenues by over 180%"


Paid to Publishers


Ad Requests Monthly


Happy Publishers

Recommended Reading

Ad Optimization
March 27, 2023

The Top 5 Ad Sizes That Generate the Most Revenue in 2023

Read More
March 22, 2023

The Ups and Downs of ChatGPT for Publishers| Maximize Your Revenue…But at What Cost?

Read More
Traffic Cop
Last updated: March 22, 2023

The High Cost of Fake Traffic: $143 Billion Gone

Read More

Trusted by 1,500+ publishers worldwide

10X your ad revenue with our award-winning solutions.

Let's Talk

Ready to 10X your ad revenue with the #1 ad management partner?

Start Now