“Ad servers make optimal decisions at an impression level, which are suboptimal for overall revenue.

How is this suboptimal for overall revenue? They routinely forego scarce, high-value RTB demand in favor of direct sold campaigns, which could have been served to the next visitor. For example, if two people visit your website at the same time, when you as a publisher are 50% sold through, one of those users will be served the direct sold campaign and the other will be sent to the indirect channel. They're both worth $15 to the direct advertiser, although visitor A is worth $10 in the RTB marketplace while visitor B is only worth $1.

The publisher's ad server usually doesn't know how much each visitor is worth within the indirect channel, when considering its decision on whom to serve the direct sold campaign to. Even if it did, $15 still beats $10 and a standard auction ­– awarding the impression to the highest bid – would still result in the wrong decision, which is to serve the direct sold campaign to high-value visitor A and send visitor B to the indirect channel. The right decision is to send high-value visitor A to the indirect channel and serve the direct sold campaign to visitor B because it means the publisher earns $25 instead of $16.”
Tagged: Ad Servers, Ad Tech

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