A client recently asked me a surprisingly complicated question: If an advertiser wants a concession, should you give them a price discount, or give them bonus impressions (often called added value)?
At first glance, these look like exactly the same thing. If your normal price is a $10 CPM, a 20% discount makes the price $8. Alternatively, you could keep the $10 CPM price and just give the advertiser 25% more inventory. In both cases, the budget is $10,000, and the advertiser gets 1.25 million impressions.
Mathematically, they are equivalent. But from a pricing and a yield perspective, they behave very differently.
A price discount can change what the advertiser thinks your inventory is worth. Bonus impressions can create unique operational challenges and, depending on how much inventory you have, may carry a real economic cost. Here is how to navigate the decision.
What Do Advertisers and Agencies Actually Prefer?
Before deciding what you prefer as a publisher, you need to understand what your buyers value. If all of your demand strongly prefers one type of incentive over the other, you are going to have a tough job trying to move them to a different system.
Most buyers will usually prefer a price discount. Top of that list of reasons is simplicity:
- Clear Expectations: If their rate is $10 CPM and you discount it to $8 CPM, there isn’t much ambiguity.
- Clean Metrics: Especially in performance-oriented industries or retail media networks, it is simply easier to calculate Return on Ad Spend (ROAS) when there is a flat price discount rather than bonus impressions added into the mix.
However, agencies often prefer bonus line items. Added value allows them to point directly to the invoice and show their client exactly what they negotiated (e.g., “We got you 25% more inventory for the same budget”).
The Danger of the Discount: Anchoring
From my perspective, the biggest downside of a price discount is that it is much easier for the discount to become the new normal.
If someone receives a price discount and pays an $8 CPM instead of $10, they start to think their expected rate is $8. Over time, they don’t really think they’re getting a discount anymore. They anchor on that discounted price, which creates a long-term problem. If you are repeatedly giving discounts to all of your advertisers, at some point you have to ask yourself: Is $10 really the price?
Furthermore, it creates precedent. Once an advertiser has paid $8, the next negotiation doesn’t usually start at $10. It starts with the buyer saying, “Last time we paid $8,” making it very difficult to move the pricing later.
The Case for Added Value
Because the advertiser often has a fixed budget, giving them a lower CPM or more impressions still nets you the same $10,000. But what you are changing is the buyer’s reference price.
With added value, you are keeping the underlying price but changing how much inventory they receive. This is one of the main reasons I prefer added value: it lets you give the advertiser more for their budget without resetting what they think the inventory is worth.
There is also a distinct inventory management advantage. The added value does not have to run on the exact same inventory as the original campaign. With the advertiser’s agreement, you could choose to run the additional impressions elsewhere on your website or in your app. If your original inventory is constrained, you can keep the paid campaign on higher-value placements and fulfill the bonus somewhere where you have more availability.
The Hidden Costs of Bonus Impressions
Bonus inventory is not without its flaws. There are a few operational and economic hurdles you must account for:
- Operational Complexity: Usually, you need to run the bonus as a separate line item in your ad server. This means additional setup, pacing, monitoring, and reconciliation. It is simply more operational drag than changing a CPM.
- Opportunity Cost: Most publishers have some unsold inventory most of the time, but not all of the time. If it is the fourth quarter, or a premium placement, the bonus inventory you promised is no longer cheap. It may be taking impressions away from another advertiser who would have paid full price. Be very careful about calling that inventory “free.”
- Double Dipping: You need clear rules around which concessions apply and when. Otherwise, you may end up with an advertiser who receives a discounted CPM and then negotiates bonus inventory on top of it.
How Programmatic Demand Changes the Equation
There is a more complicated yield management problem that many people miss: the role of programmatic demand.
If your programmatic demand is competing directly with your direct-sold campaigns in the ad server, a discount can actually hurt campaign delivery. If a direct-sold campaign is discounted from a $10 CPM to an $8 CPM, there may be situations where that managed campaign loses to programmatic demand in the auction.
If, instead, the campaign is still running at a $10 CPM with the bonus impressions running elsewhere, the paid portion of the campaign will continue winning stronger inventory. This can actually result in better overall performance for the advertiser—a dynamic not many buyers think about when requesting rate cuts.
My default is usually to recommend added value, but I would not turn that into a blanket rule. It protects you from the anchoring effects of repeated price discounts, and when the bonus inventory has low opportunity cost, it is considerably cheaper economically than giving up hard revenue.
But if you are close to sold out, if the inventory is highly valuable, or if the bonus creates significant operational and measurement problems, the answer flips very quickly. Ultimately, you shouldn’t ask if a 20% discount is better than a 25% value add. You should ask: What does each concession cost me, and what does it do to the long-term value of my pricing?