Programmatic · also called floor, reserve price, price floor
Floor price (reserve price)
A floor price is the minimum bid a publisher will accept for an impression; bids below the floor are rejected, even if they are the highest bid in the auction.
A floor protects publishers from selling too cheaply. If the floor is US$1.00 CPM and the best bid is US$0.80, the impression goes unsold in that auction (and may go to another channel or a house ad).
Floors can be "hard" (bids below it are always rejected) or "soft" (used in second-price auctions to set a clearing price). They can be fixed or dynamic: dynamic floors change by audience, geography, device, time of day or buyer, often set by algorithms. In Google Ad Manager they are managed through pricing rules; in Prebid through a floors module.
Setting floors is a balancing act. Too high and fill rate falls; too low and buyers get bargains they would have paid more for. In second-price days, opaque dynamic floors were controversial because they could push buyers toward paying their full bid. In first-price markets, floors interact with bid shading: good floors stop shading from dragging prices too low.
Think of it like this
A floor price is like the reserve on a painting at auction: if no one bids above it, the painting goes back to the owner.
An example
A publisher raises its floor for US mobile traffic from US$0.50 to US$0.90 CPM. Fill drops from 92% to 85%, but average CPM rises from US$1.10 to US$1.45, so revenue goes up.
Related terms
First-price auction
A first-price auction is an auction in which the highest bidder wins and pays exactly what they bid, which is now the standard model in programmatic advertising.
Fill rate
Fill rate is the percentage of ad requests that are actually filled with an ad, calculated as impressions served divided by ad requests, multiplied by 100.
Bid shading
Bid shading is a technique DSPs use in first-price auctions to lower a bid automatically toward the price actually needed to win, so advertisers do not overpay.
SSP (supply-side platform)
An SSP (supply-side platform) is software that publishers use to sell their ad inventory automatically to many buyers, running auctions and managing prices, deals and quality controls.
Auction dynamics
Auction dynamics are the rules and behaviours that decide who wins programmatic ad auctions and at what price, including auction type, floors, fees, bid shading and bid order.