• by Philip Rosenstein , Staff Writer, March 20, 2017

The emergence of header bidding in programmatic advertising is a significant development. And now, as header bidding technology segues from client-side to server-to-server-side (S2S) technology, the issue of transparency remains, according to a study released last week by Index Exchange.

“The obstacle that has challenged the industry in its shift from client-side to server-side header bidding has not been technology, but trust,” the study said. “Bringing the wrapper server-side innately introduces new risks to transparency, which must be closely monitored. When the wrapper resides in the browser, every part of the process is available for inspection. This is not the case for the server-side integration.”

The study found that while S2S-side header bidding integrations can help alleviate latency issues (slow page load times, for example), calls to the exchanges and auctions still happen outside the client browser.

The  study suggests questions publishers should ask when considering a move from client-side to S2S-side header bidding integrations.

The first question: How will moving to S2S wrappers affect the consumer experience? The bottom line here is that S2S allows for the wrapper to reside outside of the client browser, on the server. The server, itself, can make all the necessary calls to header bidding exchanges without slowing down the consumers' Web browser, which can result in a decrease in call times. But it’s not that simple. S2S integrations, have their own latency issues when infrastructure is not up to par, according to Index exchange.

The second question is critical to publishers: How will S2S impact real-time bidding (RTB) revenue overall? The answer to this question is one of the most difficult to predict, according to the study. The interesting issue here is that even though S2S wrappers can increase access to demand partners, not all demand is "good" demand.

“For each additional exchange to add incremental value, there has to be a substantial amount of unique demand, priced to compete with direct sales, and technologically able to respond to the demands of an ever decreasing timeout,” the study said. Publishers also need to be careful to avoid low-quality ads and the potential for fraud.

Further, difficulties with syncing consumer data when using S2S integrations can diminish the value of ad impressions, as data and targeting play an important role in overall CPMs. Because of the nature of programmatic marketing and RTB, transparency and fairness play a central role in how digital marketplaces function.

“Bringing the wrapper server-side innately introduces new risks to transparency, which must be closely monitored,” the study explained. “When the wrapper resides in the browser, every part of the process is available for inspection. This is not the case for the server-side integration.”

The issues of trust and transparency are critically important for the future of header bidding.

We’ve seen, for example, companies like Rubicon Project calling for more openness in the header bidding landscape, pushing the industry to adopt Prebid.js, an open-source wrapper for header bidding.

Publishers need to keep asking questions about the technology and evolving their products.  If not, they risk being left behind, with the potential to negatively affect the consumer's Web experience and devalue ad inventory.