Auction Health

The goal of the Koddi auction is to optimize auction health. Auction health is a measure on whether an auction is performing its role – enforcing rules to allocate supply to demand in a way that meets everyone’s needs. In our experience, there are four main pillars to auction health:

• Advertiser Return
• Monetization
• Fairness
• Diversity

Advertiser Return

Advertiser return is generally by ROAS:

REVENUE FROM ADVERTISING / COST OF ADVERTISING

ROAS measures the effectiveness of the program for the advertiser:

• Are advertisers getting net positive benefit from the program?
• Are we meeting advertiser goals?
• Advertisers may have alternative metrics based on specific business objectives.
• Total conversions and ROI are also generally used.
• Advertiser results are paramount to long term program success.

The target for return is generally set by the marketplace – how does a program compare to other options for an advertisers. A program generally needs to match or beat the performance of like programs.

Monetization

Monetization can generally be measured by burn rate:

SPEND ÷ BUDGET, for a completed timeframe

Burn rate measures how much of the available budget is used:

• Are we making the most of our available demand?
• Are advertisers able to spend as much as they want?
• We want to maximize this value while maintaining CVR and ROAS.

The target burn rate will depend on a number of factors – this is especially true in hotels programs where the inventory is highly localized and market dependent.

Fairness

Fairness can generally be measured by minimum CPC percentage:

CLICKS AT MINIMUM VALUE ÷ TOTAL CLICKS

Minimum CPC percentage measures how dynamic and competitive the auction is:

• Are the rules of the auction consistent?
• Is the publisher having to ‘step in’ to influence the auction?
• This caps advertiser return and could lead to “gamed” bidding.
• We generally want to minimize this value.

Like burn rate, the target for fairness will vary depending on the marketplace and business objectives of a program.

Diversity

Auction diversity is generally best measured by the Percentage of Active Advertisers without Impression:

ACTIVE ADVERTISERS WITHOUT IMPRESSION/TOTAL ACTIVE ADVERTISERS

Advertisers without impressions are not participating much in the ad program:

• Is the program overrun by a small group of advertisers?
• We want to make sure that everyone has an opportunity to participate.
• If a single bidder is winning all the auctions, the marketplace experience loses its luster for customers and suppliers.
• Like the other metrics, the target for diversity will vary depending on the marketplace and business objectives of a program.