Custom Bidding

Custom Bidding: How It Enhances Campaign Performance in the Programmatic
Ecosystem

In the world of programmatic advertising, bidding strategies are at the heart of campaign
performance. With advertisers increasingly relying on automation to drive ad delivery, the
use of custom bidding strategies is gaining prominence. Custom bidding allows advertisers
to fine-tune their bid strategies based on specific business goals and data signals, offering
unprecedented control and precision.
This blog will explore the concept of custom bidding, how it works in the programmatic
ecosystem, and how it can significantly enhance campaign performance.

What is Custom Bidding?

Custom bidding is a programmatic feature that allows advertisers to create tailored bidding
algorithms to match their unique campaign objectives. Unlike traditional bidding strategies
(e.g., CPC, CPM, or CPA), which focus on predefined metrics, custom bidding enables
advertisers to assign value to specific signals or actions based on their business priorities.
With custom bidding, advertisers can set unique rules and prioritize signals such as
viewability, time spent on site, engagement, or any other metric that matters to their
business. It offers more granular control, allowing advertisers to bid more intelligently and
optimize towards key performance indicators (KPIs) that are most relevant to them.
For instance, instead of bidding solely for impressions or clicks, custom bidding allows
advertisers to assign higher value to users who engage deeply with the content, spend more
time on the website, or visit key pages like product or conversion pages. This tailored
approach ensures that the advertising spend is focused on delivering results that matter.

How Custom Bidding Works

Custom bidding typically operates on demand-side platforms (DSPs) like Google’s DV360,
The Trade Desk, or Amazon DSP. It integrates with real-time bidding (RTB) to optimize ad
delivery based on custom algorithms that advertisers configure.
Here’s how the process works:
1. Data Collection and Signal Identification: The first step in custom bidding is
identifying the signals that are most important to your campaign’s goals. These
signals can include user behaviors, demographic data, site interactions, or viewability
scores. For example, an e-commerce brand might prioritize users who spend more
than 30 seconds on the product page or users who view specific product categories.
2. Algorithm Creation: After identifying the key signals, advertisers create a custom
algorithm or set rules within the DSP. The algorithm determines how to value these
signals and adjusts bids accordingly. For example, the algorithm might assign a
higher bid for users who show high engagement or are more likely to convert based
on historical data.
3. Real-Time Optimization: Once the custom bidding algorithm is in place, the system
automatically adjusts bids in real time as the campaign runs. The DSP evaluates
each ad impression in the RTB auction based on the custom bidding rules and bids
the appropriate amount to win valuable impressions.
4. Continuous Learning: Custom bidding algorithms are dynamic and adaptive. As
campaigns progress, the DSP gathers data on performance and adjusts the bidding strategy to improve results further. This continuous learning loop allows advertisers
to refine their bidding strategy over time, improving efficiency and outcomes.

The Key Benefits of Custom Bidding

Custom bidding offers several advantages over standard bidding strategies, enabling
advertisers to better align their campaigns with their business objectives. Here are some of
the key benefits:
1. Precision and Granularity
One of the biggest advantages of custom bidding is the level of precision it offers. Traditional
bidding strategies are often generic and may not align perfectly with specific campaign
goals. With custom bidding, advertisers can set highly granular rules based on the unique
behaviors and actions that drive value for their business.
For example, instead of simply bidding for clicks, an advertiser can bid higher for users who
are more likely to make a purchase based on specific behaviors, such as browsing multiple
product pages or adding items to the cart. This level of precision helps optimize budget
allocation, ensuring ad spend is directed towards the most valuable impressions.
2. Improved ROAS (Return on Ad Spend)
Custom bidding allows advertisers to focus their spend on audiences and actions that are
most likely to drive conversions or desired outcomes. By setting higher bids for users who
are more engaged or likely to convert, advertisers can maximize their return on ad spend
(ROAS). This leads to more efficient spending, reduced ad wastage, and ultimately, better
overall performance.
For instance, an advertiser can prioritize bids for users who have previously engaged with
high-value content on the website, such as product demo videos or case studies. This helps
the brand focus on quality engagements, driving higher-value conversions and better ROAS.
3. Personalized Campaign Optimization
Custom bidding provides the flexibility to align bidding strategies with personalized campaign
goals. Different businesses have different objectives—some may focus on brand awareness,
while others may prioritize lead generation or direct sales. With custom bidding, advertisers
can tailor their approach to reflect their specific objectives.
For example, a brand running a product launch campaign might focus on increasing video
viewability and engagement, while another campaign might prioritize driving conversions
from a specific audience segment. Custom bidding enables advertisers to optimize their
campaigns for the most important metrics, regardless of their business focus.
4. Adaptability to Changing Market Conditions
The digital advertising landscape is constantly evolving, with user behaviors, market
conditions, and competition fluctuating. Custom bidding algorithms are highly adaptive and
can adjust in real time based on changing conditions. If a particular user segment becomes
more valuable, or if certain creative assets perform better in specific placements, the bidding
algorithm can shift to capitalize on these insights.
This adaptability helps advertisers stay competitive in real-time bidding environments,
ensuring that they are always bidding strategically to maximize performance.

5. Greater Control Over Ad Spend
With custom bidding, advertisers gain more control over how their budgets are allocated.
Instead of relying on broad, automated strategies, they can direct their spend towards the
areas that offer the highest value. This level of control helps avoid ad wastage and ensures
that every pound spent is working towards the campaign’s goals.
By identifying key signals, such as user engagement or high-value touchpoints, advertisers
can instruct the bidding algorithm to allocate more spend where it counts, improving overall
efficiency.
How Custom Bidding Enhances Campaign Performance
Custom bidding plays a pivotal role in driving enhanced performance in programmatic
campaigns. Here are some of the ways it does this:
1. Higher Conversion Rates: By bidding more aggressively on users who demonstrate
high engagement or intent to purchase, custom bidding increases the likelihood of
conversions. This leads to higher conversion rates and better outcomes from your ad
spend.
2. Reduced Ad Wastage: Custom bidding ensures that you are not overbidding on low-
value impressions or users. By focusing spend on the most relevant audiences and
signals, advertisers can minimize wastage and allocate budget more efficiently.
3. Real-Time Decision Making: Programmatic ecosystems are dynamic, and custom
bidding ensures that advertisers are making real-time, data-driven decisions that
maximize impact. The ability to adjust bids in real-time based on live signals
improves the chances of winning valuable impressions.
4. Optimized Campaigns for Specific Goals: Whether your campaign goal is to drive
website engagement, conversions, or video completions, custom bidding allows for
fine-tuned optimization. By setting specific bidding parameters, advertisers can
improve performance for their unique goals and KPIs.
5. Increased ROAS: With more precise targeting and optimized bidding, advertisers
often see significant improvements in ROAS. Custom bidding ensures that spend is
directed towards high-value opportunities, leading to better returns on investment.

Conclusion

Custom bidding is a powerful tool in the programmatic ecosystem that gives advertisers the
ability to optimize their campaigns in real-time based on custom signals and objectives. By
leveraging first-party data, refining algorithms, and continually learning from campaign
performance, custom bidding can significantly enhance campaign performance. From
improved ROAS to better control over ad spend, custom bidding offers the flexibility and
precision that modern advertisers need to stay competitive in today’s digital landscape.
As the programmatic space continues to evolve, custom bidding will become an essential
part of every advertiser’s toolkit, allowing for smarter, more efficient ad buying and driving
better results across the board.
At RTBA, we have a proven track record in custom bidding and can help clients
elevate performance to greater lengths. Reach out to us to see how we can tailor a
strategy to meet your business needs and maximize your campaign outcomes.