A bid strategy is the set of rules, automated or manual, that determines how much to bid in each auction in pursuit of an objective such as a target CPA, a target ROAS, or maximum clicks. Target CPA (tCPA) is appropriate when the value of each conversion is roughly uniform, because it focuses bidding on hitting a specific cost per action. Target ROAS (tROAS) is preferable when conversion values vary and the value of each outcome matters; it lets the system bid more aggressively for high-value users. Conversion value optimization extends this idea by bidding toward higher-value outcomes using reported conversion values rather than treating all conversions as equal.
Underneath every bid strategy is an ad auction: a real-time selection process that decides which ad is shown and at what price based on bids and quality or utility signals. In a first-price auction, the winner pays exactly what they bid. In a second-price auction, the winner pays just above the next highest bid. Many modern markets use hybrid designs that draw on both, and the exact auction shape matters because it changes how bidders should strategize and how prices converge to market value.
Programmatic advertising is the automated buying and selling of ad inventory through software and auctions, often via real-time bidding (RTB). In an RTB system, a bid request, a package of information about an impression opportunity including context, device, and user signals, is sent to potential buyers, who respond with bids in milliseconds. The infrastructure is typically organized around three roles: the demand-side platform (DSP), which buys on behalf of advertisers; the supply-side platform (SSP), which sells on behalf of publishers; and the ad exchange, which matches bids with inventory. Understanding these roles is essential for diagnosing where money is spent, who has visibility into what, and how to control quality.