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PART VI: DIGITAL AD PRICING<br />
DIGITAL ADVERTISING PRICING STRUCTURES<br />
Digital advertisements have some common pricing structures that run across the various types of ads.<br />
While ads have different objectives, the prices are often based on the same models. In this section, we<br />
are going to take a look at some of these models and what they mean.<br />
Bidding<br />
Many ad units are sold in an auction,<br />
which to most people brings up the<br />
image of a high-stakes bidding war<br />
with a fast-talking auctioneer or the<br />
feeling you get when you win a<br />
brand new Apple Watch from eBay.<br />
Most digital advertising ad auctions<br />
don’t operate this way. They use a<br />
unique formula to determine your<br />
ad’s position—where your ad places<br />
on the page.<br />
According to Google, its ad auction<br />
“uses both quality and bid to<br />
determine an ad’s position”. Bidding<br />
models, like Google’s, allow you to<br />
have a competitive bid, even if you<br />
offer a lower bid amount, because<br />
part of its formula is based on<br />
content–relevant keywords and<br />
quality images.<br />
In an auction environment, you can<br />
pay less than your maximum bid<br />
because you only pay what is<br />
minimally required to hold your ad<br />
position and ad format. The price you<br />
pay will increase up to your<br />
maximum bid in order to hold your<br />
position and format. Because of this<br />
structure, you can sometimes come<br />
in under budget. When this happens,<br />
what you pay is called your actual<br />
cost-per-X—where ‘X’ could be actual<br />
cost-per-lead or actual cost-per-click,<br />
etc. based on your pricing model.<br />
Types of Bidding<br />
• Manual:<br />
Manual bidding is exactly like it<br />
sounds, done manually by you or<br />
the member of your team who<br />
manages digital advertising. This<br />
person manages the maximum<br />
bids manually for campaigns and<br />
individual keywords.<br />
• Automatic:<br />
Automatic bidding is less handson,<br />
as it relies on a daily average<br />
maximum budget. Then, the ad<br />
platform does the bidding for<br />
you. The goal of the automatic<br />
bidding is to bring you the most<br />
clicks possible in your budget,<br />
within your maximum.<br />
Programmatic ad buying, which<br />
we will discuss in more depth<br />
later in this guide, is an automatic<br />
type of bidding done in<br />
milliseconds by software.
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