WTF are post-auction discounts?

Digiday 02 Apr 2020 04:00

Agencies love deals whereby the more media they buy in bulk the less they pay per unit but have found those discounts scarce in programmatic. In post-auction discounts, however, agencies may have found the winning ticket as they let agencies rely more on their buying power to secure those deals just as they would for TV or radio. 

With these deals set to become more commonplace as agencies try to exert more control over how programmatic auctions work, here’s a primer on how they work and who stands to benefit from them.

Let’s start with the basics

Post-auction discounts happen when a publisher agrees to make money off of winning bids for certain impressions from an agency. So if an agency wins an impression in an auction at one price, the actual fee they pay will be lower once the discount kicks in. The theory behind the deal isn’t new. Agencies already have similar, direct deals with specific publishers in place, where both have agreed to trade impressions for an agreed fee and amount of spend in private marketplaces. What’s different with post-auction discounts is they happen via an ad tech vendor like a supply-side platform and tend to be focused on inventory bought from the open marketplace. Those discounts can range anywhere between 1% and 50%, according to Index Exchange, which has built a tool for agencies to strike those deals. 

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