How Your Floor CPM Strategy Affects Auction Performance
Floor CPM is your minimum acceptable price. Set it wrong, and you either lose auctions or sell too cheap. Finding the optimal floor requires understanding auction dynamics.
How Floors Affect Auctions
When a buyer bids $1.50 CPM and your floor is $1.00, you win the auction and get paid (in second-price auctions, typically just above the second-highest bid or your floor).
When your floor is $2.00, you don't participate in that auction. The impression goes to fallback or another buyer.
The tradeoff:
- Higher floor: More revenue per impression, but fewer impressions sold
- Lower floor: More impressions sold, but potentially underpriced
Finding Your Optimal Floor
Method 1: Market Testing
Start with a moderate floor based on your traffic type and geo. Track two metrics over a week:
- Fill rate: What percentage of impressions are sold?
- Effective CPM: What do you actually earn per 1000 impressions?
If fill rate is 90%+, your floor might be too low—buyers are easily clearing it. Try raising 10-15%.
If fill rate is under 50%, your floor might be too high—you're losing auctions. Try lowering 10-15%.
Optimal is typically 60-80% fill rate at a price you're satisfied with.
Method 2: Geo-Specific Floors
Different geos have vastly different market rates:
- US/UK/CA/AU: Premium pricing
- Western Europe: Strong pricing
- Eastern Europe/LATAM: Moderate pricing
- Southeast Asia/Africa: Lower pricing
A single global floor either prices you out of premium markets or undersells cheap traffic. Set geo-specific floors:
- US: $2.00 floor
- Europe: $1.20 floor
- LATAM: $0.40 floor
This maximizes revenue across all your traffic.
Method 3: Time-Based Adjustment
Demand varies by time:
- Business hours in buyer timezones: Higher demand
- Weekends: Often lower demand for B2B offers
- Month end: Budget flush, higher demand
Consider raising floors during peak demand and lowering during off-peak to maximize both volume and price.
Common Floor Mistakes
Anchoring to past rates: "I used to get $3 CPM" doesn't mean the market still pays that. Floors should reflect current demand.
Ignoring fallback: If your fallback pays $0.50, setting a $0.40 floor loses money. Floor should be at least fallback rate.
One floor for everything: Your VPN traffic isn't worth the same as your premium desktop traffic. Segment and price accordingly.
Never adjusting: Market rates change seasonally, with economic conditions, with competition. Review floors monthly at minimum.
The Psychology of Floors
Floors aren't just economics—they signal value. A floor of $0.10 tells buyers "this is bottom-tier traffic." Even if you'd accept $0.10, starting there positions you poorly.
Set floors that reflect the traffic's worth, then let the market validate or correct your assessment.
The goal isn't maximizing any single metric. It's maximizing total revenue: price × volume. Find the floor that optimizes this product, not just one factor.