OnDemand WTP Pricing Research

The price is right? Let the data answer that | Marketing Land

You don’t hear as much about using offline data and technology to determine accurate bidding. I look across the industry and still see the lion’s share of the efforts devoted toward using offline data and technology to segment audiences, while the same offline data and technology remain comparatively underutilized when it comes to optimizing bid price.

New differentiator: bid price optimization
Who wouldn’t want to increase conversion rates while decreasing cost per acquisition (CPA) without changing the targeting? Too many people assume that real-time bidding (RTB) has this optimization baked into the auction format, that supply and demand will always ensure that we’re paying the best price. That’s not the case. In reality, bid decision-making is based not only on supply and demand market forces but on algorithms, and those algorithms are only as good as the data that informs them. In audience targeting, we typically layer in first-party data, offline data and other proprietary sources, but bidding algorithms don’t.

There’s a plausible reason that marketers don’t seize this advantage: the methods for determining RTB pricing are opaque compared to those for fixed targeting audiences. The costs for a fixed targeted audience are clearly stated, but the actual pricing for RTB is usually determined by black-box algorithms and is aggregated as an average CPM post-campaign. Typically, we don’t learn why some impressions are worth more than others or whether someone is pulling prices out of thin air. And as a result, we fail to grasp the ways we can further optimize for bid price.

More transparency would help to address this frustration, but it’s more likely that business outcomes will drive adoption. There’s reason to think that they will.

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The price is right? Let the data answer that.