What the Winner Pays

Promovolve is second-price at heart: the winner pays what was needed to win, not what they offered. But the score that wins is engagement × CPM^α, not a bare bid — so the clearing price must be quality-adjusted too.

Sample for allocation, price on means

Selection uses sampled (noisy) values on purpose; pricing must not. A price that depended on a random draw would make identical impressions cost different amounts. So the system allocates on samples, prices on posterior means: after the winner is chosen, the runner-up’s score is recomputed from mean engagement rates, and the winner pays the minimum CPM at which it still would have won:

clearingCPM = (runnerUpScore / winnerEngagement)^(1/α)

clamped between the slot’s floor and the winner’s own bid. Intuition: invert the scoring formula and ask, “with your engagement rate, what’s the cheapest bid that still beats the next-best candidate?”

Two properties fall out:

• Quality is a discount. A creative readers engage with needs a lower CPM to hold its rank, so it pays less than a mediocre creative bidding identically. Advertisers improve their price by improving their ad.
• Bidding is honest. Raising your bid above what’s needed doesn’t raise your price (the runner-up sets it); lowering it only risks losing. There is no bid-shading strategy to compute (shading: bidding below your true value to dodge overpaying — the daily homework of first-price auctions), which is why Promovolve ships no campaign-side bid optimizer — the mechanism leaves nothing for one to do.

The runner-up is taken from the winner’s own content category, so the price reflects real competition for this kind of page, not an accidental cross-category comparison.

Edge cases

• Exploration usually prices at the floor. A zero-history winner is priced by the same mean formula, using its cold-prior engagement — the category affinity, the fold prior, and the newcomer bonus. Because the bonus inflates its engagement, the inverted price typically clamps down to the floor; a cold winner facing a strong same-category runner-up can still clear above it.
• No runner-up → floor. A lone candidate pays the floor. (What stops floors from collapsing in a one-bidder market is the floor optimizer — see Floor Optimization — which pegs the floor to a lone bidder’s bid.)
• Pinned re-encounters are free. A dog-eared creative serving to the reader who bookmarked it clears at zero. The reader’s memory is not inventory.

Spend is recorded at the clearing price

Budget reservation, pacing, and the ledger all use the cleared price, not the bid. A campaign bidding $8 into thin competition might spend $2.10 per thousand — its budget lasts proportionally longer, and the advertiser’s reports show the price they actually paid. Every spend event flows through buffered, deduplicated, at-least-once recording into a double-entry ledger in micro-dollars (millionths of a dollar — integer arithmetic, so the books never accumulate rounding drift); settlement splits gross into platform margin (a percentage set in basis points — hundredths of a percent — that can change on a dated schedule) and publisher earnings, one idempotent row per advertiser–campaign–site–day.