Google announced an important new feature this week designed to simplify the header bidding workflow. Publishers can more easily integrate header bidding partners with Google’s ad server, used by thousands of publishers, on an equal and real-time basis.
These capabilities have been a long time coming—nearly five to 10 years depending on who you ask—and should result in increased competition and higher yield for publishers by letting other header bidding vendors offer a seamless alternative to Google’s ad exchange.
We see this is a positive development from Google, and hope the market and Google collectively continue to push to foster competition and let publishers use the exchange or ad server of their choice.
What we know about the header bidding feature
The pros and cons of header bidding have been well documented, so we won’t go into that here. Instead, let’s discuss two disadvantages around line item setup and bid bucketing that publishers see when trying to use an independent exchange that the header bidding feature may address.
Before header bidding, exchanges had to represent the price they could bid on publisher inventory with an estimated static price—let’s say $0.34. That was challenging and unrealistic because there’s too much variability in the value of impressions and available demand, making averages an inefficient way to transact. The $0.34 price would either undervalue or overvalue an impression compared to the Google ad exchange, which could always bid with a real price.
Header bidding got around this by setting up many line items to represent price points at every penny, and then dynamically activated line items based on the supply and demand available. The ad exchange that hooked into the ad server now had real price competition.
However, line item limitations required that publishers create buckets to represent ranges that were then rounded in the bid process. For example, an exchange that bids $5.24 would be rounded down to compete at $5.00, whereas Google’s ad exchange could win the auction with a perfectly accurate bid.
This dynamic is pure lost revenue for publishers, and the advantage it gave Google in higher win rates helped make its exchange the preferred path for buyers.
The header bidding feature should fill this gap, and will allow publishers to have their header bidding partners compete at cent-level granularity, no matter what price buckets or line item limitations exist. This effectively does away with both the onerous line item setup and the bid bucket (dis)advantage.
We are cautiously optimistic—in the past, Google has proposed changes that appeared as though they would help level the playing field, but ultimately didn’t have that result (for example, around unified pricing rules and removing last look). However, Google deserves kudos for this development and we are eager to see the impact.
Rallying around the Prebid ecosystem
The publisher ecosystem is going to benefit from Google’s header bidding feature, and the wrapper played a huge part in driving that change. There have been numerous wrapper solutions over the years, and Index played a big role in popularizing their adoption.
We were one of the early contributors to the Prebid adapter codebase, and later joined the board of Prebid to support and advocate for the future of open collaboration in this industry. In its first version, Google’s header bidding feature will apply to the Prebid wrapper, providing an opportunity to make publisher integrations easier and to drive collaboration around industry standards.
Index will continue to invest more in Prebid going forward, and will work with our customers in the coming months to help them update to Prebid-powered setups.
Providing even more choice for publishers
Technology choices and reducing ad tech barriers matters. Based on conversations with our customers, publishers would like to be able to call Google’s ad exchange via Prebid.js or Prebid Server. This would allow for new levels of choice without causing publishers to lose Google’s ad exchange, a major source of demand.
The introduction of the header bidding feature is an important step for our industry. It gives publishers the power of choice, and should result in a more balanced ecosystem where competition thrives, ultimately driving higher yield for publishers.
If you have additional questions about Google’s new header bidding feature, please contact your Index Exchange team.
