Google counters header bidding with exchange bidding for Dynamic Allocation

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Google is upping its pushback against header bidding.

Today, the tech giant announced on its DoubleClick Publisher Blog that it is testing exchange bidding in Dynamic Allocation, and it is making First Look available to all of its clients:

Exchange bidding in Dynamic Allocation will allow publishers to invite trusted third-party exchanges and SSPs to submit real-time prices using industry-standard RTB calls. These prices will be considered along with bids from the DoubleClick Ad Exchange and the publisher’s reservation campaigns to pick the highest-paying ad. Exchange bidding also empowers publishers with unified and accurate reporting on the revenue they are earning from each exchange/SSP. And just like First Look, exchange bidding works with no additional client-side code.

Google product manager Jonathan Bellack told me that opening up First Look was something his company “has been talking about for a while.” Offering exchange bidding through Dynamic Allocation, he said, came because publishers were asking about ways to improve “competition [while] protecting user experience.”

He has contended that the header bidding approach increases latency in page loading, something publishers — wary of giving users more reasons to employ ad-blockers — obviously want to avoid. Google’s implementation of outside exchanges in Dynamic Allocation is server-to-server, instead of the client-side header bidding, ostensibly improving page loading. Everyone will send their actual bids at the same time, with no special treatment for Ad Exchange.

Some, such as ad exchange AppNexus, have disputed the idea that header bidding increases latency. Bellack declined to provide any specifics about how much time this latency might cost.

He also mentioned that the adtech industry needs to “have a discussion” about the possibility that, when multiple exchanges are involved, the same request to fill inventory could be issued from multiple exchanges to the same demand-side platform (DSP). In other words, advertisers could end up bidding against themselves, because “there is no auction ID.” That circumstance, however, could happen any time exchanges compete against exchanges.

Header bidding, where a publisher takes bids directly from advertising demand sources before going to an ad server like Google’s, has been driven in large part because of Dynamic Allocation.

Opening up First Look

When publishers undertake a campaign in DoubleClick for Publishers that does not have a guaranteed number of impressions, they can choose Dynamic Allocation. This means that Google’s Ad Exchange gets to match or beat the CPM rate for the campaign.

It also means the publisher is not necessarily getting the highest price that all advertising demand sources might pay. With header bidding, all advertisers programmatically bid on inventory before the publisher reaches out to the ad server.

The newly announced test of exchange bidding in Dynamic Allocation includes Rubicon Project and Index Exchange and publishers About.com, Hearst, Meredith and Zillow.

Rubicon Project’s Chief Technology Officer, Neal Richter, emailed me that his company will continue working both with header bidding and with Google’s new efforts.

Tom Shields, Senior Vice President of Strategy for AppNexus’ Publisher Technology Group, sent us this statement:

At the heart of the matter, header bidding is designed to help DFP customers access multiple demand sources directly, in a fair and transparent auction. If Google has truly embraced the concept of open dynamic allocation, that will be welcomed news for publishers. But today’s announcement poses as many questions as it answers. Will publishers on DFP be able to work with any and all demand partners they choose? Will those demand partners be able to compete on equal footing with AdX? Will these demand partners be asked to pay a special “tax?” Before we have answers to those questions, it’s premature to draw conclusions about the future of header bidding.

Google also said today it is letting any publisher into DFP First Look, announced as a beta last December. First Look, part of Ad Exchange, was Google’s initial attempt to counter the interest in header bidding. It allowed premium ad buyers to see all of a publisher’s inventory before reaching out to an ad server like Google’s or even before a publisher’s directly sold ads.

Such advertisers pay a higher price through First Look, but they get a better choice of inventory. Google touted the fact that it did not require header tags and that it didn’t impact latency. Publisher Demand Media reportedly got high bids from some advertisers, such as remarketer Criteo, but overall low volume. First Look required, and will still require, that buyers come in through Ad Exchange. About 200 publishers have tested First Look to date.