Ep 8: Price floors, the number that can raise or sink revenue

Myth. A higher price floor always means higher revenue.

A price floor is the lowest CPM you’ll accept for an impression.

Buyers see your floor in the bid request. Here’s when it helps. A buyer values your slot at three dollars but expects little competition, so it plans to bid one sixty. With a two dollar floor, it must bid two to stay in. You earn forty cents more CPM. Here’s when it hurts. Raise the floor to three fifty. That buyer values the slot at three, so it doesn’t bid, and nobody else clears it. The impression goes unsold, or to a house ad. Revenue is CPM times filled impressions. Higher CPM on fewer impressions can mean less money.

After any floor change, compare revenue and fill rate, not CPM alone. Change one floor at a time.

Next, more bidders, more revenue? Not past a point.