Overview

In Real-Time Bidding (RTB), the exchange's calculations are used for billing. Typically, the exchange's billing calculations will be slightly higher than the bidder's calculations, which leads to differences between predicted and actual spending. On some exchanges, discrepancies can be as low as 2% of spend, while on others (especially for video impressions), the difference can be as high as 10%.

FreeWheel accounts for these discrepancies automatically in its bidding algorithm to make the exchange's billing numbers and FreeWheel's calculations as close as possible.

How it Works

Here's a spend and billing example without a discrepancy allowance (in both examples, FreeWheel's fee is ignored for simplicity):

• A customer spends $1,000 on the exchange, according to FreeWheel's data
• The exchange sends the customer a bill at the end of the month for $1020

As a result of this discrepancy, there can be a significant and unexpected reduction in margin at the time of reconciliation. So, FreeWheel automatically applies a small discrepancy allowance when bidding:

• The customer spends $1,000 on the exchange, but FreeWheel was reducing bids by 2% so they only really spent $980 on the exchange (according to FreeWheel)
• The exchange sends the customer a bill at the end of the month for roughly $1000 since their numbers are generally 2% higher.

With the discrepancy allowance applied, the net difference between the original spend and the exchange's bill is closer to zero.