rtisers lose $6.6 billion annually due to bid shading

According to a new study by AI-adtech firm Cognitiv, media buyers aren’t aware of bid shading. It costs them $6.6 billion per year.

What is it? Publishers offer bid shading as an alternative to auctions at first price to programmatic advertisers. This is thought to give publishers an advantage. Cognitiv found that 70% of buyers pay an additional fee for bid shading. This adds up to billions of wasted dollars.

Also, 75% believe that the shift from first-price to auctions benefits publishers. 64% also say that auctions at first price cause CPMs for them to increase.

Why do we care? There are many ways to waste money and commit fraud in the digital advertising supply chain. By tracking metrics such as CPM, advertisers can keep pressure on agencies and their adtech partner to reduce costs.

Dig deep: What programmatic advertising is all about

What is it? Moreover, digital buyers cannot agree on what it is. The survey respondents’ responses are below:

• This tool allows bidders to adjust their first-price bidding (33%);
• This algorithm optimizes the win-rate of their CPM and CPM (32%);
• It is an instrument that manipulates the bid to make them pay less (22%);
• The bidder will be charged an additional fee of 12%.

In a press release announcing the results of the survey, Aaron Andalman said that bid shading was a generic tool used across all campaigns. It does not consider the advertiser’s specific campaign goals or the individual who is being targeted by the advertisement. Advertisers need a long-term solution. One that’s designed by media buyers for advertisers, and not one that publishers offer as a temporary solution to placate advertisers.

In a study conducted in partnership with Alter Agents and over 250 media buyers it was found that about a third don’t know there is bid shading.

Bid shading costs advertisers $6.6 billion per year was first published on MarTech.