How floors work in Index Marketplaces

A floor A pricing control used by publishers and exchanges to set a minimum sale price on inventory. is a predefined minimum acceptable price for a winning bid for a piece of inventory. When a floor is set, Index Exchange (Index) only accepts bid responses from DSPs that meet or exceed that price, and rejects those that fall below it. Rejected bids that did not clear the floor price are shown as “bid below floor” in reports. The minimum floor price that you can set on a Marketplace Package is $0.10.

To make sure that publishers earn their intended minimum revenue for Marketplace transactions, both Marketplace fees and Vendor fees (for example, a segment fee) must be factored in when determining the floor price that Index passes to DSPs. To do this, Index takes the highest publisher The owner of a website or app where advertisements are served. floor and adds applicableMarketplace fees and Vendor fees to it. Index then compares the publisher's highest floor value + fees to the Marketplace Package floor and applies the following logic:

For first-price auctions, whichever floor is highest between the highest publisher's floor + fees and the Marketplace Package floor is sent to the DSP Demand-Side Platform (DSP). A software platform that automates bidding decisions in real-time and efficiently connects buyers and audiences through an ad exchange or SSP. Also known as a buy-side platform..
For fixed-price auctions:
- If the highest publisher's floor + fees is lower than the Marketplace Package fixed price For specific deals, a fixed price can be negotiated between a publisher and a buyer. If the advertisers bid at this fixed price or above, their bid responses are eligible to compete in the auction, and, if they win the auction, they only pay the fixed price regardless of what their bid amount was., the fixed-price floor is sent to DSPs and the deal A private auction that allows publishers to offer specific inventory directly to selected buyers identified by a deal ID. Terms are negotiated and are agreed upon before the auction occurs. can transact.
- If the highest publisher's floor + fees is higher than the Marketplace Package fixed-price, the deal is considered ineligible to transact.

First-price auction example

To figure out which floor to pass, we must compare (highest publisher floor + marketplaces fees) to the Marketplace Package floor, and send the highest value to the DSP.

Highest publisher floor	Marketplace fees	Marketplace Package floor	Calculation	Floor sent to DSPs
$5.00	10%	$4.00	($5.00 / (1 - 10%) = $5.56) compared to $4.00	The publisher's floor + fees is highest, so DSPs are sent a floor price of $5.56.
$2.00	15%	$5.00	($2.00 / (1 - 15%) = $2.35) compared to $5.00	The Marketplace Package floor is highest, so DSPs are sent a floor price of $5.00.
$5.00	$1.50 fixed-rate CPM Cost Per Thousand (CPM). A pricing structure for buying impressions and is the cost of serving an advertisement 1,000 times. Also known as Cost Per Mille (where M represents 1,000 in Roman numerals) or Cents Per Mille.	$4.00	($5.00 + $1.50 = $6.50) compared to $4.00	The publisher's floor + fees is highest, so DSPs are sent a floor price of $6.50.
$2.00	$0.50 fixed-rate CPM	$5.00	($2.00 + $0.50 = $2.50) compared to $5.00	The Marketplace Package floor is highest, so DSPs are sent a floor price of $5.00.

First-price auction example with vendor fee

Highest publisher floor	Marketplace fees	Marketplace Vendor fee	Marketplace Package floor	Calculation	Floor sent to DSPs
$5.00	10%	$1.00	$4.00	($5.00 + $1.00) / (1 - 10%) = $6.67 compared to $4.00	The publisher's floor + fees is highest, so DSPs are sent a floor price of $6.67.
$2.00	$1.50 fixed-rate CPM	$1.00	$5.00	$2.00 + $1.00 + $1.50 = $4.50 compared to $5.00	The Marketplace Package floor is highest, so DSPs are sent a floor price of $5.00.

Fixed-price auction example

If a Marketplace Package has a fixed price, we send the Marketplace Package fixed floor price to DSPs, but only if it is higher than the highest publisher floor + fees.

Highest publisher floor	Marketplace fees	Marketplace Package fixed floor price	Calculation	Will the deal transact?
$5.00	10%	$4.00	($5.00 / (1 - 10%) = $5.56 compared to $4.00	No, because the publisher's highest floor + fees is higher than the Marketplace Package fixed floor price.
$2.00	15%	$5.00	($2.00 / (1 - 15%) = $2.35 compared to $5.00	Yes, because the Marketplace Package fixed floor price is higher than the publisher's highest floor + fees.
$5.00	$1.50 fixed-rate CPM	$4.00	($5.00 + $1.50 = $6.50 compared to $4.00	No, because the publisher's highest floor + fees is higher than the Marketplace Package fixed floor price.
$2.00	$0.50 fixed-rate CPM	$5.00	($2.00 + $0.50 = $2.50) compared to $5.00	Yes, because the Marketplace Package fixed floor price is higher than the publisher's highest floor + fees.

Fixed price example with vendor fees

Highest publisher floor	Marketplace fees	Marketplace Vendor Fee	Marketplace Package fixed floor price	Calculation	Will the deal transact?
$5.00	10%	$1.00	$4.00	($5.00 + $1.00) / (1 - 10%) = $6.67 compared to $4.00	No, because the publisher's highest floor + fees is higher than the Marketplace Package fixed floor price.
$2.00	15%	$1.00	$5.00	($2.00 + $1.00) / (1 - 15%) = $3.53 compared to $5.00	Yes, because the Marketplace Package fixed floor price is higher than the publisher's highest floor + fees.