Programmatic mediation increases revenue for mobile developers, creates brand opportunities for marketers, and surpasses the limitations of the waterfall mediation model. Naturally, mobile studios have begun embracing programmatic solutions and leveraging their various capabilities. To assist, we’ve assembled a programmatic mediation glossary that covers the most common terminology developers and marketers will see during their transitions.
Ad Operations (Ad Ops)
Ad operations are the systems and processes which allow for the sale and delivery of digital advertisements. They allow digital publishers to deliver ad campaigns and earn revenue in a process called “fulfilling an order of sale.” In practical terms, ad operations allow companies who earn revenue from digital advertising to “sell, input, serve, target and report on the performance of online ads.”
Ad operations can also refer to a specific department within a digital publisher, ad network, or technology provider that manages advertising workflows. In these cases, such a department would largely be responsible for ad-based revenue generation.
Within the context of in-app header bidding, bid depth is the number of eligible demand sources participating in an auction.
In most cases, high auction bid depths will see a corresponding increase in the value of winning bids due to increased competition. For that reason, publishers view high bid depth as positive, while demand sources view it as negative.
When a demand source submits a bid it can be one of two types: A hard bid or soft bid.
Hard bids are real-time auction offers made by a demand source. The highest value hard bid wins the auction and the demand source pays its value in full.
Soft bids are auction offers made by non-programmatic demand sources. The value of these bids is based on average historical or predicted CPM. If a soft bid wins an auction, but the actual CPM is lower than predicted, the demand source will pay the reduced value.
Soft bids occur when some or all demand sources within an auction cannot participate in real-time, making it impossible to offer hard bids. Programmatic mediation solutions make this allowance so demand sources who work with advertisers on a CPI basis can still participate.
A DSP (demand-side platform) is a system where advertisers can buy digital inventory listed by publishers. They allow advertisers to manage campaigns across ad networks simultaneously, as opposed to one at a time. DSPs can also help marketers manage vertical and lateral targeting while optimizing their campaigns based on various KPIs.
KPIs (key performance indicators) are the metrics advertisers use to measure the success of a given ad campaign. KPIs can vary depending on what a given ad initiative aims to achieve.
CPA (cost-per-action or cost-per-acquisition) is a measurement of total advertising spend against total attributed conversions. In programmatic mediation, it is a method of measuring campaign performance in terms of interactions that lead users towards the desired conversion event.
Some publishers use CPA advertising models where marketers only pay revenue for actions that lead to a conversion, such as an app click or opening a recently installed app. This model is beneficial to advertisers because it transfers much of the responsibility for campaign performance to publishers.
CPI (cost-per-install) is a measurement of total advertising spend against total attributed app installs. In programmatic mediation, it is a method of measuring campaign performance in terms of app installations.
CPI can be measured by country, platform, ad network, or app category as such individual results can vary wildly. Most publishers use CPI advertising models where marketers pay revenue for each completed installation. This is because app installations are one of the most common conversion events marketers use to determine whether a campaign was successful.
CPM (cost-per-mille) is a measurement of total advertising spend against every thousand attributed impressions. This format is one of the most common methods used to price web ads in traditional online advertising. CPM is often presented as an effective or expected CPM (or eCPM) that helps forecast revenue.
While mobile ad campaigns are arguably better served by metrics like CPI and CPA, CPM still has a place in the mobile advertising world because it effectively measures brand-building initiatives. CPA advertising models can also track user demographics and present a baseline for engagement rates.
ROAS (return on advertising spend) is the metric that informs advertisers how much revenue their ad impressions are generating. ROAS is measured by recording the cost associated with acquiring users through an ad network or campaign and subtracting it from total revenue. A high ROAS suggests that an advertising strategy is successful, while a low ROAS implies that tactics need improvement.
This calculation is distinct from ROI (return on investment) in that ROAS focuses on returns from specific advertising initiatives, while ROI deals with entire campaigns.
In mobile ecosystems, “in-app header bidding” is the practice of running auctions for ad impressions between demand sources. These auctions are conducted automatically and in real-time by programmatic mediation solutions. The value of each bid fluctuates based on any market segments to which the intended user belongs — this lets demand sources assign higher-value bids to target audiences.
Header bidding is an evolution of and improvement to the waterfall model, in which demand sources are prioritized based on historical performance and expected yield.
First-Price Auction Bidding Model
In a first-price auction bidding model, final buyers will pay the exact amount of their winning bid. This maximizes seller revenue and encourages buyers to bid close to what impressions are worth to them. First-price auction bids are common among programmatic mediation solutions.
Second-Price Auction Bidding Model
In a second-price auction model, final buyers will pay $0.01 above the second-highest bid. This limits maximum seller revenue but encourages buyers to bid high amounts to maximize the odds of winning. Second-price auctions have become rare as programmatic mediation opportunities continue to grow.
For more information on how Tapjoy can help you navigate the world of mobile advertising, contact one of our talented growth consultants today!