What is an ad floor?
An ad floor is a minimum price threshold associated with an advertising opportunity. A bid below the applicable threshold may not be eligible to compete.
The purpose is to prevent valuable inventory from being sold at an unnecessarily low price.
Why publishers use floors
Publishers have limited inventory. Every impression that is sold represents an opportunity to earn revenue, so publishers need mechanisms that help protect the value of their available supply.
The danger of setting floors too high
A floor that is too aggressive can reduce the number of eligible bids. In some situations, protecting a theoretical price can result in fewer actual transactions.
The objective should therefore be balance: protect inventory value without unnecessarily eliminating demand.
Competition creates information
Bid competition can provide a useful signal about how much advertisers value particular inventory. Strong competition suggests that multiple buyers consider the opportunity attractive.