The revenue you earn from Google Adx is proportional to the ad request volume, fill rate (or coverage) & AdCPM. As a monetization team member, you would have little control over the ad request volume. The fill rate & AdCPM you receive depends on the price floor that’s set on Google Adx. So, effectively, the only control a publisher has on Google Adx is setting of pricing floors.

The more granular your price floors, the more frequently it is corrected and the methodology/algorithm used for correction determines the revenue you end up earning from Google Adx.

Why does price floor affect Fill Rate & AdCPM? This is because Google Adx runs second price auctions. In this auction, the highest bidder wins, but pays the higher of the second price or price floor.

Since price floors are so important, it makes sense to make them highly granular, algorithm driven and full automated. This can improve the publisher’s revenue dramatically from the same ad request volume & same content.

(Originally published on Quora.com)

Author
Gourav Chindlur
CEO, Tercept

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