An algorithm that walks your bid down from what you are willing to pay toward what you actually need to pay to win. First-price auctions punish naive bidders who submit their true max. Bid shading estimates the clearing price and bids just above it. The algorithm is only as good as the signal feeding it. Some shading is disciplined. Some of it is a guess that looks like math.
Ad tech glossary
Bid Shading
Technical definition
An algorithmic technique used in first-price auctions to help buyers bid optimally by estimating the minimum bid needed to win while avoiding overpayment.
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