  Floors (also known as reserve prices) help publishers to increase the
expected revenue of their ad space, which is usually sold via auctions. Floors
are defined as the minimum bid that a seller (it can be a publisher or an ad
exchange) is willing to accept for the inventory opportunity. In this paper, we
present a model to set floors in first price auctions, and discuss the impact
of its implementation on Yahoo sites. The model captures important
characteristics of the online advertising industry. For instance, some bidders
impose restrictions on how ad exchanges can handle data from bidders,
conditioning the model choice to set reserve prices. Our solution induces
bidders to change their bidding behavior as a response to the floors enclosed
in the bid request, helping online publishers to increase their ad revenue.
  The outlined methodology has been implemented at Yahoo with remarkable
results. The annualized incremental revenue is estimated at +1.3% on Yahoo
display inventory, and +2.5% on video ad inventory. These are non-negligible
numbers in the multi-million Yahoo ad business.
