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 — where there is competition. Raising your bid above what’s needed doesn’t raise your price (the runner-up sets it); lowering it only risks losing. Floors reinforce this rather than undermining it: in a competitive category the floor is capped below the second bid, so it can never wedge itself between you and the runner-up and become your price. 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 honest exception: a category monopolist pays ~99% of whatever they bid, because the floor tracks their bid (see Floor Optimization). That is first-price-like by design — full extraction where no runner-up exists to set a price — and it lasts exactly until a second bidder shows up.

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 99% of a lone bidder’s bid. Combined with this pricing rule, that is how “a monopolist pays what they offered” is actually implemented: no code charges the bid directly; the floor walks up to it and the no-runner-up path prices at the floor.)
• 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.

One currency in the books, any currency on screen

Everything above — bids, floors, clearing prices, the ledger — is denominated in US dollars, and stays that way. Currency is one more place where a system can quietly lie to itself: convert at write time and your books inherit every exchange-rate wobble; convert per transaction and you manufacture a second ledger with a precision the first one never had. Promovolve does neither. The books know exactly one currency.

What does convert is the screen. Each user can pick a display currency in their preferences, and read-only amounts — spend, budgets shown as figures, earnings, wallet balances — render converted at a single daily reference rate, uniformly, every converted figure marked with ≈ and every page that converts carrying the rate and its date. Yesterday’s earnings will read slightly differently tomorrow; that is honest, because the converted number was never a fact — it is what the dollar fact is worth today.

Three things never convert, deliberately: input fields (a budget is entered in dollars, with the converted figure shown beside it — nobody should type ¥15,000 into a dollar box), auction pricing detail (floors and CPMs are the marketplace’s own arithmetic), and the operator’s pages (whoever runs the books reads the books). When a publisher is eventually paid in their own currency, that conversion happens at the bank at payout time and is recorded as what it actually was — a banking fact, not a display estimate.