What is a Bid?
In mobile advertising, a bid is the price an advertiser offers to pay for ad inventory. Bidding occurs in real-time auctions where multiple advertisers compete for the same impression, with the highest bidder (or highest value bidder) winning the right to show their ad.
Bids can be expressed in different pricing models: CPM (cost per thousand impressions), CPC (cost per click), or CPI (cost per install).
Second-Price Auction
Types of Bidding
Real-Time Bidding (RTB)
Automated auction-based buying where bids are placed in real-time (under 100ms) for each individual impression.
Header Bidding
Advanced technique where multiple demand sources bid simultaneously before the ad server is called, maximizing publisher revenue.
Fixed/Direct Bidding
Pre-negotiated pricing for premium inventory, bypassing the auction process entirely.
Bidding Strategies
| Strategy | Best For | Risk Level |
|---|---|---|
| Maximum Bid | Scale quickly | High cost risk |
| Target CPA | Performance campaigns | Volume risk |
| Target ROAS | Revenue optimization | Learning period risk |
| Manual Bidding | Full control | Time intensive |
| Lowest Cost | Budget efficiency | Quality risk |
Factors Influencing Bid Value
- User Quality: High-value users command higher bids
- Placement: Premium placements justify higher bids
- Creative Performance: High-performing ads can bid higher profitably
- Time of Day: Peak hours often require higher bids
- Competition: More advertisers = higher clearing prices
- Seasonality: Q4 and holidays increase competition
Pro Tip: Bid Shading
With first-price auctions becoming more common, use bid shading algorithms to avoid overpaying. Many DSPs offer built-in bid optimization that predicts the optimal bid to win without excessive spend.
Bid Optimization Best Practices
- Start with Data: Analyze historical performance before setting bids
- Segment Bidding: Different bids for different geo, device, and user segments
- Use Machine Learning: Automated bidding often outperforms manual
- Monitor Closely: Check win rates and adjust bids to hit targets
- Consider LTV: Bid based on expected user value, not just CPI
Common Bidding Mistakes
- Bidding too low and missing quality inventory
- Bidding too high and wasting budget on low-value impressions
- Using the same bid across all segments
- Not accounting for auction type (first vs second price)
- Ignoring creative performance in bid calculations