Almost like an underground trend that looks over as soon as The New York Times discovers it, header bidding seems endangered to some now that Google has endorsed it.
Publishers have been increasingly using header tags to upend the usual order of business in programmatic ad sales, comparing bids from a universe of buyers all at once instead of working through them one by one and taking the first good offer they get. Then Google this month began opening its DoubleClick for Publishers to let outside bidders compete simultaneously with its own network of buyers, potentially giving publishers what they want with less hassle.
The move was somewhat surprising because it meant letting outside ad exchanges see and act on information that Google previously kept close for its own advantage.
But the outcome will depend on what Google does next. Will it allow publishers to bring in any potential partners they want, or tightly control who participates? Will it charge minimal fees for the privilege of participating in the bidding, or escalate prices in step with its power?
“Google’s announcement has been said to be the death of header bidding,” said Andrew Casale, president and CEO at Index Exchange, one of two supply-side platforms that Google invited to its pilot header exchange. “But I strongly believe it represents choice. What the header brought forth was transparency and accountability. It basically killed the ‘black box.’ It remains to be seen how this new choice will operate and manifest because the publishers that have taken the bet on transparency rising, they won’t subscribe themselves to the ‘black box’ again.”
The rationale for header bidding remains firmly in place, Mr. Casale added. “The header democratized access to demand, and is effectively free at 100% revenue share,” he said.
Google’s other partner in the pilot is Rubicon. Asked whether publishers will be able choose any partner down the road, Google implied that they might.
“We’re not looking to interfere with publishers’ ability to max their yield because if we ever fail to be a solution that helps them make the most money, publishers have shown time and again that they will find another way to generate those revenues,” said Jonathan Bellack, director of product management at Google. “So, it is built in the nature of the industry that we need to stay laser focused on trying to help publishers generate the most revenue they possibly can in the context of a sustainable industry.”
Mr. Bellack suggested, however, that Google can’t be hands-off as it pursues that agenda.
“Everyone in the industry, whether buyer or seller, wants more transparency when it can benefit them,” Mr. Bellack said. “There are a lot of areas where transparency is a big question here. One of the things when it came to these client side technologies was trying to improve the transparency of what publishers were actually being paid. When you open your ad selection process to a third party claiming what they are going to pay, you want some assurance they will really pay that. Part of what we are trying to achieve with the exchange bidding solution is giving publishers confidence that their reports and earnings matchup.”
Asked about potential fees, Mr. Bellack declined to comment.
Craig Berlingo, VP of product and seller platforms at Tremor Video, said Google’s recent decision was necessary before the company lost complete control as empowered publishers looked elsewhere for programmatic ad revenue. “The reason header bidding became so popular was because of lack of transparency and limited yield management,” he said. “When publishers took the initiative and put header bidding on their page, it pushed Google to be a participant.”
“Google lost visibility to how publishers were monetizing,” Mr. Berlingo added.
Its steps so far aren’t enough to eliminate the reasons for header bidding, according to Mr. Berlingo, citing its control over who gets to play and its limited visibility. “It says who the SSPs are — and there are a lot more out there — and the other piece is yield management,” he said. “Because Google is not connected to all the demand out there, you won’t have everyone in a big pile competing. They have a lot more work to do before publishers are going to be completely satisfied.”
Google does bring advantages to the table that header bidding can’t match, like speed. “One of the challenges with header bidding is they take time to call and get back,” said Justin Festa, head of revenue at LittleThings, a lifestyle publisher. “They create latency. Google won’t have that because everything is server-side.”
Google also invests a lot of resources in protecting publishers and sustaining the industry in the long run. The company has a huge team working to prevent malware from spreading through ad tech and protect buyers from fraud.
More importantly, integrating Google’s solution is far easier than implementing a header tag. Typically, a publisher would have to have his or her engineering team integrate the header tag. Google’s solution requires none of that.
“Dynamic allocation might be the answer for a lot of publishers,” Mr. Festa said, referring to the mechanism by which Google is opening up DoubleClick. “It’s still early in the game, but what you’re going to see is more and more ad dollars heading toward header bidding solutions. Google has a lot to gain from this, but so do we.”
While both header bidding and Google’s solution have benefits, many people cited one alarming drawback for marketers: the potential for advertisers to drive up their own costs by bidding different amounts as they encounter the same inventory in multiple exchanges without recognizing it.
“I think it happens often and it is a big fear,” Mr. Berlingo said. “A DSP might think they are seeing five times as much inventory when there is actually just one out there. That makes a lot of noise for the data and benefits the publisher the most.”