Bid Shading Is Covering for Inefficient Programmatic Algorithms

But machine learning can help

Four people holding up signs with one man and one woman individually holding signs that say bid
Bid shading has become popular because of the industrywide shift from second-price auctions to first-price auctions. Getty Images

As programmatic advertising has increasingly become the norm for brands, both SSPs and DSPs have added more tools for helping marketers price bids. Recently, bid shading has become a popular method for helping marketers save money by setting bid prices in first-price auctions. What bid shading does is use an algorithm to automatically tweak the marketers’ bid price lower based on historical data that considers exchange, the size of the ad and the site that the ad would be featured on, etc.

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Jeremy Fain is the CEO and co-founder of Cognitiv.