The Trade Desk (TTD) Hybrid Pricing Model

  • updated 1 mth ago

From 4 / 1 / 2022 onwards,  The Trade Desk will be updating its pricing strategy and we are working to implement it on our side. This model is a hybrid pricing model which is now based on Media spending and moving away from traditional CPM pricing.

NOTE: This change is from the Trade Desk's side and Lotame is just implementing it since this update affects mutual clients.

Going forward you would have to fill out 2 things for each audience:
1. % Media spend
2. CPM Cap

The Lotame Platform UI will now have the ability to add these fields.

Some Details about the Pricing Model:

% Media Spend:
The percentage of the total campaign spend that the audience would earn (ex. If Media Cost is $10 and % Media Spend is 20% the audience would earn $2)

CPM Cap:
The maximum CPM value that the audience can earn. A CPM cap overrides the % media spend when the % media spend exceeds the CPM cap 

If Media Cost is $10 and the % Media Spend is 20% with a CPM Cap of $1.50, the audience would earn $1.50 instead of $2).

Note from TTD:
There is no limit to what the % media spend one can be set at by the client (PDX Seller).
That said, TTD definitely discourages simply applying a 100% rate with a cap as that defeats the point of hybrid pricing (not to mention poor optics when a client sees a 3 figure rate).
TTD only encourages doing that when there are contractual obligations that have to be met based on prior agreements to guarantee a certain CPM for custom segments, but not as an overarching approach to your entire taxonomy.

Some Recommendations:
A Spreadsheet is attached, please see the last tab of Lotame Rate Recommendations which may help when setting the price.

There's a table that essentially suggests getting a 0.75 average CPM rate, you can apply a 13.0% of media rate with a $ 3.75 CPM cap, 95.0% media rate with $ 0.82 CPM or any range in between from the table. There are a few CPM examples too in column L.

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