Diko's Theorem

This blog hasn’t been very technical lately (it’s been mostly travel notes and personal reflections), but a topic resurfaced recently, and I wanted to put it down before it fades—It's just hours before I leave for another Thanksgiving family trip.

Before anything else: yes, naming something after myself feels a little bold. I’m aware. And I’m not claiming discovery or originality—if someone shows me an established academic name for this, I’ll retire mine immediately.

I chose to name it mostly because it’s easier to talk about when it has a label. And I’ve always appreciated simple frameworks like CAP Theorem—short, memorable, and useful—so I wanted something similarly concise for a pattern I keep seeing in advertising markets.

So here’s the theorem in a more formal style:

Diko’s Theorem
In an advertising marketplace with limited liquidity, it is possible to optimize at most two of the following properties at the same time:
(1) Advertiser performance
(2) eCPM
(3) Fill rate
Attempting to maximize all three simultaneously will degrade one—typically advertiser performance—unless liquidity increases.

It isn’t mathematical in the strict sense, but the dynamic is consistent enough to feel like a constraint rather than just an observation.

I’ve seen this pattern often: teams push metrics as if all three should move upward together. Dashboards reward that mindset. Revenue pressure reinforces it. And in a meeting, it always sounds reasonable to say:

“We want strong advertiser ROI, high eCPM, and 100% fill rate.”

But when the marketplace isn’t liquid enough—meaning insufficient competing demand—the system pushes back. One metric weakens. And in practice, the one that usually gets sacrificed is advertiser performance.

Not deliberately — but slowly:
• Raising price floors
• Tweaking allocation
• Optimizing auction behavior for short-term yield
• Expanding demand sources without considering quality

Publishers are especially susceptible to this, because eCPM and fill rate look like success and are easy to measure. But when advertiser performance drops, churn follows, liquidity declines, and ironically the originally “improved” metrics collapse later anyway.

The simplest takeaway is:

Prioritize advertiser value. Revenue metrics are outcomes, not primary levers.

When advertisers succeed, they reinvest.
When they reinvest, liquidity grows.
When liquidity grows, eCPM and fill rate naturally can improve—without forcing it.

Performance is the foundation.
Liquidity sets the boundary — growth follows its horizon.
eCPM and fill rate are signals along the way.

So that’s the idea. No grand theory, no universal law—just a pattern observed enough times to feel worth naming, at least for now. And if those three lines guide decisions, the rest tends to make sense on its own.

Now back to packing before I miss my flight.