The news represents a major change to the DFP ad server, as Google will now allow real-time bids from publishers’ other exchange partners -- which are often numerous -- to its Dynamic Allocation product. It has also begun testing exchange bidding in DFP.
The change marks a major turning point, since many companies in the programmatic ecosystem, along with publishers, have complained about Google’s process.
Header bidding, which issues a call for bids before the ad server is called, represents the ecosystem's response to getting around Google -- which until now only permitted its own ad exchange to compete for each ad impression. Google’s ad server would project what outside exchanges would bring in, and exchanges were not able to submit bids for each individual impression.
This dynamic was not favorable for publishers’ yield, and header bidding was used to enable bidders to compete on real price information, not estimates.
The DFP change was “months” in the making, according to Jonathan Bellack, director of product management for Google’s DoubleClick.
“We’re always working with publishers and talking to them about how they’re generating yield, and the strategies they’re pursuing. We’ve known for a while that when someone is setting up competition within DFP, they’re entering an average CPM. We want accurate price competition, but we’re also cautious because we don’t want to hurt the user experience. Publishers were asking us if there was something DFP could do,” Bellack explained.
Bellack called for an industrywide discussion about programmatic buyers’ needs: “We need a dialogue with the buy side. The biggest unanswered question that we as an industry need to work through is, what is the effect of technologies -- including header bidding -- on buyers.”
For example, he said the same query from the same user could be sent to the same programmatic buyer multiple times, with a potential negative effect: “It can drive up their technology costs because you can only buy that impression once. Also, does it mean that buyers are competing with themselves, and paying more than they intended?” he asked.
In conjunction with the announcement, Google is creating a pilot program testing exchange bidding in Dynamic Allocation. Pilot program partners include Index Exchange, Rubicon Project, About.com, Zillow and publishing giants Hearst and Meredith.
The goal of the pilot program is to ensure that the technology works, according to Bellack. "We’ll be working with our publisher partners on yield--and, most importantly, we want to make sure that this delivers a good consumer experience."
Among other reasons, Dr. Richter wrote that Rubicon Project's participation in the pilot program is intended to "allow new opportunities for publishers to test the potential benefits of migrating away from the current antiquated waterfall-based cascade of ad tags that may slow the Web page performance and interrupt the user experience."
What this means now and in the long term for header bidding -- and all the players in the programmatic ecosystem that offer it -- is unclear. One possibility is that header-bidder solutions, which gained popularity in response to so-called “walled gardens" like Google’s, will become obsolete.
“Along with Google, OpenX agrees that server to server is the best way forward for managing multiple header-bidding tags. Server to server is a long-term scalable solution, one that can also provide unprecedented levels of transparency and control..." an OpenX spokeswoman told Real-Time Daily via email.
CPXi's bRealTime programmatic solutions division weighed in on the move: "Far from tolling the death of header bidding, Google's announcement is a strong validation of what the industry is seeing as a growing trend, and a signal to header-bidding providers to hit the accelerator on publisher-focused product development plans that might otherwise have been in neutral," said Brian Weigel, the company's general manager.
Previously, only Google's ad exchange was allowed to compete for impressions. This was one of the key reasons behind the rise of header bidding: it offered publishers higher CPMs for their most valuable inventory.
In December 2015, Google launched First Look for publishers, its take on header bidding. Some said it wasn't a true header-bidding solution. Unlike header bidding, the
solution forces publishers and buyers to work through AdX, and the solution didn't sit in the header of a page.
Bellack declined to comment on the future of header bidding. “Our true north is trying to help publishers grow and thrive with sustainable advertising businesses. We have to find a sustainable path, and we’re trying to help publishers do that,” he said.
Bellack said one of the biggest benefits of real-time bidding is that it doesn’t require any additional client-side code, so there’s no additional wait time imposed for publishers to add that code. "What we like about programmatic and FirstLook is, it makes a lot more sense to have one call from client to server, and then have all the players figure out what to serve on the server side,” he said.
Bellack also cited a benefit of using open RTB on the server side: that all the other exchanges are called at the same time. For example, a query comes to DFP and at the same time, it can call programmatic buyers on other exchanges. DFP can see the prices of all the other bids. “We use all of that information to make decisions on what ad to serve... It also helps with latency."
“I think the big pitfall is going to be the impact on buyers and buyer reaction,” Bellack said. “It’s opening up additional demand -- but if the effect of this technology or header bidding is hurting advertiser ROI, there will eventually be an advertiser reaction,” he warned.