Bidder - Guaranteed Outcomes

With Guaranteed Outcomes, buyers can achieve maximum reach while paying for media in a way that makes sense for their business, and sellers benefit from increased demand in the auction without having to manage the risk of impressions that don’t achieve the buyer’s desired outcome. Guaranteed Outcomes (formerly Guaranteed Views) is a feature of Xandr's Exchange, designed to reduce friction in the programmatic marketplace by enabling buyers to purchase 100% of their media with the assurance that it will be viewed completely.

Guaranteed Outcomes includes the following features:

For more information about how Xandr measures viewability, see the Introduction to Viewability page.

Process

Buyers that choose to buy with Guaranteed Views enter a vCPM bid as opposed to a CPM bid. Their bid will be converted and enter the seller’s auction as a CPM bid, with all normal auction mechanics applied.

Should the bid win the auction, the seller will be paid the CPM price. The buyer’s creative will be served with a viewability measurement script, and the buyer will only be charged the vCPM price if the impression is measured viewable. By default, the IAB definition of a viewable ad (50% of pixels in-view for 1 continuous second) and the Xandr measurement script are used. However, we support additional viewability definitions and measurement technology vendors as well.

Buying and selling guaranteed outcomes has the following limitations:

• Guaranteed Outcomes is only available when buying Open Exchange and Deal inventory.
• Outcome-based bids are not accepted when clearing directly with a third-party seller, or when buying managed inventory.*

* You can, however, guarantee ad delivery for managed inventory using managed vCPM.

Logic of Guaranteed Outcomes

The following overview describes the logic of Guaranteed Outcomes:

• Guaranteed Outcomes are possible because the Exchange automatically translates outcome-based bids (vCPM & CPCV) from the buyer into impression-based CPM revenue for the seller. This translation facilitates the transaction by bridging the currency gap between buyer and seller.
• Buyers who choose to buy with Guaranteed Outcomes enter an outcome-based bid (e.g. vCPM for Views and CPCV for Completes) as opposed to an impression-based CPM bid. Their bid will be converted and enter the seller’s auction as an impression-based CPM bid with normal auction mechanics applied.
• If the bid wins the auction, the seller is paid the impression-based CPM price. The buyer’s creative is served, and the buyer is only charged if the desired outcome is measured on the impression.
• By default, Xandr uses the IAB definition of a viewable ad (50% of pixels in-view for 1 continuous second) and the Xandr measurement script to determine a view. However, we support additional viewability definitions and measurement technology vendors as well. See Introduction to Viewability for more information about choosing these alternate measurements.
• For Guaranteed Completes, we always define a complete as a served video ad that reaches 100% of its duration.

Auction mechanics

This topic describes how an auction works when a buyer submits an outcome-based bid using Guaranteed Outcomes. Buyers submit vCPM bids to buy Guaranteed Views, and CPCV bids to buy Guaranteed Completes.

Ad call

When an ad call is received, the Exchange first predicts the likelihood that the impression will yield the desired outcome. If a prediction cannot be determined, the impression is ineligible for outcome-based bids. There may be other reasons outcome-based bids aren't supported. For example, monitoring may indicate that the prediction for the given placement is inaccurate, which may lead the placement to be marked ineligible. In addition, outcome-based bids are not accepted when clearing directly with the seller. For more information on pre-bid outcome predictions, see Outcome Prediction.

If an outcome prediction is available, and all other eligibility checks pass, then the Exchange will calculate an outcome-based bid-to-CPM conversion rate. This rate is calculated by multiplying the outcome prediction by a market-making fee. For more information on the conversion rate, see the sections on Payment Conversion Rates and the Market-Making Fee.

Bid request

On each bid request, the Exchange indicates if it will accept outcome-based bids (vCPM and/or CPCV). If outcome-based bids are acceptable, the Exchange also provides the bidder with outcomes that the Exchange will accept along with the applicable conversion rate for each.

Bid response

On the bid response, if the bidder has chosen to submit an outcome-based bid, the bid includes the outcome and the bid price. The bid price is then treated as an outcome-based price.

It is possible for the outcome-based bid to be rejected. In addition to standard rejection reasons (such as failing seller ad quality rules), monitoring may indicate that the prediction for the given creative is inaccurate, resulting in the creative being marked ineligible, or the buyer may have a direct clearing relationship with the seller, which is not supported.

If the bid passes these checks, then, for the purposes of running the auction, the Exchange converts the outcome-based bid to CPM using the provided conversion rate.

Auction

After all bids are received, and any outcome-based bids are converted to CPM, the auction is executed according to standard RTB mechanics, including, where applicable, second-price logic, private marketplaces, publisher floors, etc.

If a CPM bid representing a buyer's Guaranteed Outcomes bid is the winner in the auction, the winning price will be adjusted post-auction in accordance with our auction mechanics (for example, in a second price auction, it would be price-reduced to the second highest bid + $ 01), and the seller will receive this amount as revenue (minus standard auction fees).

The price-reduced CPM bid is then converted back to an outcome-based price using the conversion rate. The buyer will be notified that it won the auction at the price-reduced outcome-based price, but the buyer will not be charged at this point.

Post-auction

The buyer's creative is served to the page. If the Exchange determines that the creative achieved the buyer’s desired outcome, an event is sent to the Exchange indicating that the buyer should be billed for the impression at the price-reduced outcome-based price. The Exchange will log the transaction and send notification to the buyer.

If the Exchange determines that the ad did not achieve the buyer’s desired outcome, or if it is unable to make the measurement, then the buyer is not billed for the impression.

Payment conversion rates

For eligible impressions, see Results, the Exchange calculates an outcome-based bid-to-CPM conversion rate before sending the bid request. To generate the conversion rate, the Exchange uses the predicted outcome rate of the given impression and a marketing-making fee. The two rates are multiplied to generate the impression’s conversion rate.

The resulting conversion rate is sent as part of the bid request. If any outcome-based bids are returned, this conversion rate is used to determine the impression-based CPM price paid to the seller.

Outcome prediction

The accuracy of the pre-bid outcome prediction plays a crucial role in the balance of the market place, that is, how much is billed to Guaranteed Outcomes buyers versus how much is paid to sellers. Given this critical role, it is important to note that pre-bid outcome predictions are managed as an independent feature of the Exchange and are publicly available.

Pre-bid outcome predictions are freely available in OpenRTB bid requests from the Exchange to all bidders and DSPs. Additionally, these predictions are generally available as an Engineered Feature of the Exchange. Buyers can use them as building blocks to develop custom algorithms using Custom Models (formerly Programmable Bidder). Outcome predictions are also used for view-rate and completion-rate threshold targeting and vCPM optimization.

Market-making fee

Xandr provides a service of creating liquidity between buyers and sellers. In doing so, incurs risk and costs from external measurement partners. Thus, Xandr charges a Market-Making Fee for this service. The target Market-Making Fee for Guaranteed Outcomes is 10%. However the actual Market-Making Fee may vary slightly due to Prediction Variability.

Market-making fee = fixed percentage + prediction variability

The Market-Making Fee charged for Guaranteed Outcomes is made up of two components:

Fixed percentage: A fixed 10% is taken during the outcome-based bid to impression-based CPM conversion and, implicitly, only charged for when impressions have achieved the buyer’s desired outcome.

Prediction variability: A positive or negative percentage, depending on the accuracy of the outcome prediction. Because the Exchange acts as a financial buffer between buyer and seller, it may have a positive or negative balance over time. A negative balance means that Xandr has over-predicted the likelihood of an outcome, and a positive balance means that Xandr has under-predicted its likelihood.

In the scenario where there is perfect prediction and all else is equal, the Exchange will have a net zero balance, making the Fixed Percentage equal to the Market-Making Fee.  There is no promise that the prediction is perfect, and in fact it’s almost impossible. As such the Market-Making Fee, or final net balance due to Xandr, is still a function of the Prediction Variability.

For transparency, Xandr publishes aggregate results for Prediction Variability externally each month. You can find these results at Monthly Prediction Variability Data.

Results (examples)

The auction mechanics for Guaranteed Outcomes create a short-term disconnect between how the buyer is charged and how the seller is paid. On average and over time, this disconnect is averaged out. In other words, for any single impression, it is likely that the seller is paid either significantly more or less than the buyer has been charged. Over many impressions, however, the difference between what is charged and what is paid should converge.

The key factor in this convergence is the accuracy of the predicted outcome rate, that is, the difference between the actual outcome rate and the predicted outcome rate. To illustrate the impact of prediction accuracy on the amount billed versus the amount paid, three different scenarios are described below – perfect prediction, under prediction, and over prediction. We’ve used Guaranteed Views for these examples, but the same holds true for Guaranteed Completes.

In the examples below:

• A buyer using Guaranteed Views bids $10 vCPM on supply with a 50% predicted viewability rate.
• The Exchange converts the vCPM bid to a $5 eCPM bid.
• The second-highest bid in the auction is a $4 CPM bid.
• It is a second price auction, so seller is paid $4.01 CPM.
• The buyer is charged $8.02 vCPM (that is, only if the impression is measured viewable).

Perfect prediction

If the Exchange perfectly predicts the viewability rate for a given piece of inventory, then the aggregate amount charged to the vCPM buyer should match the aggregate amount paid the seller.

Over-prediction

If the Exchange over-predicts the viewability of the inventory, then the aggregate amount charged to the vCPM buyer is less than the aggregate amount paid to the seller. In this example, the Exchange predicted a 50% viewability rate, but the inventory had only a 25% viewability rate. The Exchange is left with a negative balance.

Under-prediction

If the Exchange under-predicts the viewability of the inventory, then the aggregate amount charged to the vCPM buyer is greater than the aggregate amount paid to the seller. In this example, the Exchange predicted a 50% viewability rate, but the inventory had a 75% viewability rate. The Exchange is left with a positive balance.

Supported viewability standards

The definition for what constitutes a viewable impression varies from buyer to buyer. A chosen standard generally comprises three components: the media type, the viewability definition, and the measurement technology vendor. Guaranteed Outcomes is built to support any standard made up of those three components, with each standard represented as a generic clearing event. The following clearing events are supported today for Guaranteed Views.

Supported completion standards

Guaranteed Completes defines a complete as a video ad which has reached 100% of its duration. Unlike views, a video complete is a universal tracking event IAB VAST Standard.

Related topics

• Guaranteed Outcomes Bidder Integration Guide
• Monthly Prediction Variability Data