Auction - or eCPM Optimization - is a delivery method with the goal of generating the most revenue for each ad impression.
This is different from lottery, in which the system looks at the eligible ads and chooses a winner at random.
For Auctions, when choosing what ad "wins" the placement request, Adzerk:
- Filters everything down to all eligible ads
- Based on historical data and current bids, calculates eCPM (aka how much each ad will make you on average for ever 1K impressions)
- Picks the ad with the highest eCPM
This ensures you are making the most money for each ad impression.
The Auction selection method is most effective when:
- You have multiple advertisers with different bids
- You've set the expectation that bid amount will impact volume (versus guaranteeing a certain number of impressions/clicks)
- You are charging on CPC or CPA (versus straight CPM or flat fee)
Adzerk uses effective Cost-Per-Mille (thousand impressions), or eCPM, to calculate the value of each ad.
If charging on CPM, this is easy to calculate ($5.00 CPM bid > $4.00 CPM).
However, if you are charging on cost-per-click (CPC) or cost-per-action (CPA), then you'll want these numbers to be normalized into eCPM.
For instance, just because an advertiser is paying you a higher CPC doesn't mean they'll make you the most money. In this scenario, the $1.00 bidder makes 150% more for you than the $2.00 bidder because their click-through-rate (CTR) is so much higher:
So, Adzerk converts everything to eCPM, using the formula:
And then picks the ad with the highest eCPM for each placement.