Understanding Flex Video transactions

With Flex Video enabled, Index Exchange (Index) can render video ads in your banner ad slots. Because, with Flex Video, a video ad is rendered in a banner slot, the way impressions are counted must be accounted for since video and banner impressions have the following different impression counting methodologies:

• Web banner impressions are counted when the creative downloads on the user's device and begins to load. Even ads that are rendered out of view are counted as impressions. This is how your ad server counts Flex Video impressions.

• Video impressions are counted when the first frame of the video is played. Flex Video ads specifically use the OpenRTB playbackmethod: 6 attribute, which initiates on entering viewport with sound-off by default. Flex Video ads need to be in view before playback begins. This is how Index counts Flex Video impressions.

Due to these differences in impression counting methodologies between banner and video creative formats, Index has developed a feature called Expected Value Bidding (EVB). Using an Expected Value Adjustment calculation that takes video play-back probability into account, the bid price that wins the Index auction is adjusted to a lower EVB price, and this adjusted EVB price competes in your final ad server auction. Even though your ad server auction competes using the EVB price, you will still be paid the net bid price for impressions won. By making this adjustment, EVB helps to:

• Remove billing discrepancies: Due to the differences in impression counting methodologies, your ad server's banner impression counts will be generally higher than Index's video impression counts. By paying the higher Index net bid price, billing discrepancies are removed because the higher bid price is paid for the lower Index impression count, resulting in a price per impression that matches with your ad server reporting.

• Compete fairly with other demand: Video bid prices can be higher than banner bid prices. A Flex Video bid can serve in a banner slot, but it is not counted as an impression until it is scrolled into view. Therefore, the Flex Video bid price needs to be lower to compete fairly with your other banner demand in your ad server auction. Even though your Flex Video potentially competes at a lower rate than the net bid price, your publisher payment is paid at the original net bid price for impressions won.

Index makes sure that billing discrepancies are reduced and video demand competes fairly for your banner supply. EVB is currently in Beta and is only available for web banner supply.

How Expected Value Bidding (EVB) is calculated

After Flex Video is enabled, Index calculates a value called the “Expected Value Adjustment”, which is based on real-time data gathered on the play-back probability of your supply. Play-back probability is a measure based on the probability that the Flex Video ad is scrolled into view and played in the banner ad slot. The Expected Value Adjustment is used to calculate the “Expected Value Bid”, which is the adjusted winning bid price that Index sends to your ad server. The Expected Value Bid is calculated based on the following formula:

Expected Value Bid = gross bid * (1 - Index Revenue Share with Publisher) * (1 - Expected Value Adjustment)

Where:

• Expected Value Adjustment = The adjustment applied to Flex Video bids based on play-back probability. The Expected Value Adjustment is calculated as follows:
  Expected Value Adjustment = (1 - play-back probability)

  Note: Play-back probability is the probability of the Flex Video ad being scrolled into view and played in the banner ad slot. It is calculated by Index based on real-time data.

• Expected Value Bid = The winning bid price that Index sends to your ad server based on the gross bid price, Index Revenue Share with Publisher, and the Expected Value Adjustment. It may be lower than the net bid price and is calculated as follows:
  Expected Value Bid = gross bid * (1 - Index Revenue Share with Publisher) * (1 - Expected Value Adjustment)

Example of how this works in the auction process

The following example shows how the EVB price is calculated using a gross bid price of $10, Index Revenue Share with Publisher rate of 20%, net bid price of $8.00, and a calculated Expected Value Adjustment of 20%, while still resulting in an $8.00 publisher payment.

How this looks in reporting

Using this example, if 1,000,000 video impressions are counted by Index and 1,250,000 banner impressions are counted using the same payout structure, your reporting values would be shown as follows:

As a result, although you see a higher impression count in your ad server than with Index reporting, the Media Owner payment amount is equal.