Hybrid pricing
Hybrid pricing combines the percentage of media cost (POM) with the CPM cap. The Trade Desk uses a hybrid pricing model for third-party data segments to create a healthy and scalable data marketplace. This model benefits both data providers, who earn more when their data is used on high-value impressions, and advertisers, who can activate more data without runaway costs.
Here's what you to know about hybrid pricing:
- All data rates must be assigned as hybrid rates with each rate requiring both a POM value and a CPM cap. For details on submitting and managing data rates, see Third-party data rates.
- When multiple segments contribute to a single bid, the total hybrid-priced cost is split proportionally across providers using fractional compensation. For details, see Multi-element bidding and fractional compensation.
Hybrid pricing components
The following table describes each hybrid pricing component.
| Component | Description |
|---|---|
| POM | The percentage of media cost applied to the impression media cost. Data cost increases as media value increases. |
| CPM cap | The fixed maximum data rate. Data cost cannot exceed this value for a given impression, regardless of media cost. |
The POM determines data cost for most impressions. The CPM cap applies to premium inventory, where higher media costs would otherwise increase the POM-based cost beyond the cap.
The following image illustrates how a hybrid pricing model calculates data cost for each impression by applying a 50% POM and a $5 CPM cap, then selecting the lower value.
To further illustrate the examples from the preceding image, here's how the platform calculates each payout using the same 50% POM and $5 CPM cap:
- Display inventory with a $5 media CPM uses the POM because the calculated value is lower than the cap, resulting in a $2.50 data eCPM payout.
- CTV inventory with a $25 media CPM uses the CPM cap because the POM calculation exceeds the cap, limiting the data eCPM to a $5.
Hybrid pricing benefits
The hybrid pricing model provides the following benefits:
- Premium, high-CPM inventory generates more data revenue under hybrid pricing than under fixed CPM models, since data cost scales with media value.
- The CPM cap limits data costs on high-value inventory, keeping data accessible to advertisers and sustaining overall usage volume.
- A single pricing structure applies across all media channels, which reduces operational complexity and keeps rates consistent for buyers.
Best practices
The following is a list of best practices for setting hybrid rates:
- Your CPM cap should exceed your target average eCPM, since effective CPMs are averaged across low- and high-cost channels. For example, if your target data CPM is $1.00, set your CPM cap above that amount.
- An ~80/20 split for POM/CPM cap usage is a healthy benchmark. Your POM should drive the majority of payouts, with the CPM cap taking effect on premium, high-CPM inventory.
- Your POM should reflect the value of your data since higher values do not typically deter advertisers. The platform surfaces estimated data cost based on the POM, the CPM cap, and the channel, giving buyers full visibility before activation.
FAQs
The following is a list of frequently asked questions about hybrid pricing.
Are hybrid rates required across all data rate levels?
Yes. Hybrid rates are required for system, partner, and advertiser rate levels. For details, see Third-party data rates.
Why are rates restricted to the hybrid type?
The hybrid requirement promotes consistent, scalable pricing across the marketplace. Fixed CPM rates can price out advertisers on low-cost channels or leave revenue unrealized on premium inventory. Hybrid pricing addresses both scenarios by tying data cost to media value with a defined ceiling.