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How Does Proxy Bidding work?
Article ID: #000069

Proxy Bidding performs a mini-auction every time ads are delivered. The ad server will use the Max Bid amount provided by the advertiser and perform an instant auction to determine placement. The auction would look like this:

Advertiser 1, $1.00 Max Bid
Advertiser 2, $0.25 Max Bid
Advertiser 3, $0.75 Max Bid
Advertiser 4, $1.25 Max Bid

Step 1, Sort advertiser by the Max Bid.

Position #1 Advertiser 4, $1.25 Max Bid
Position #2 Advertiser 1, $1.00 Max Bid
Position #3 Advertiser 3, $0.75 Max Bid
Position #4 Advertiser 2, $0.25 Max Bid

Step 2, Auction. The auction process will bid each ajacent pair of advertisements to determine the adjusted CPC amount starting from the lowest ranked advertisement. For example, Position #4 and #3 would have an ending aution of $0.25 and $0.26 respectively. Position #3 and #2 are then placed into auction using the same process, and so on.

Step 3, The Results:
Position #1 Advertiser 4, $1.01 Max Bid
Position #2 Advertiser 1, $1.00 Max Bid
Position #3 Advertiser 3, $0.75 Max Bid
Position #4 Advertiser 2, $0.25 Max Bid

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