14 November 2024
Last modified: 14 March, 2022
Bid shading refers to the algorithms/tools offered by DSPs to help advertisers avoid overspending on impressions.
By analysing variables such as competitive dynamics, pricing data, and win rates, the algorithm automatically determines an appropriate bid that strikes a balance between the lowest price and the highest probability of winning. Bid shading is increasingly used as a compromise between first-price auctions and second-price auctions.