Why header bidding is here to stay

Reading time: 5 minutes

The triopoly of Google, Facebook, and Amazon will make up 64.0% of all US digital ad spending this year. A majority of that belongs to Google at about 28.6%. It’s no secret that Google continues to dominate programmatic advertising[1] and it’s an uphill battle for anyone who tries to come up against them. Google has been known to implement tactics to limit competitors, go as far as cutting off rival ad exchanges who put a “strain” on their servers and even favoring advertisers who spend more in their ecosystem.

EBDA vs. header bidding 

One of those tactics used by Google is exchange bidding dynamic allocation[2] (EBDA) also known as open bidding. EBDA allows publishers to invite third-party demand partners to compete for inventory[11] in a single auction with real-time, server-to-server bidding. It sounds simple, doesn’t it? Well, there’s a catch. EBDA was introduced in 2018 as an alternative to header bidding[6]

Header bidding was created as a result of the frustration the industry had with Google having the clear advantage in ad auctions. Header bidding allows multiple ad exchanges to simultaneously participate in a single auction which helps to increase market competition among platforms and diversify publisher[12]’s ad revenue. 

Here’s the catch: Google saw header bidding as an “existential threat.” In the unredacted antitrust case by the Texas Attorney General, the complaint alleges EBDA was designed to “snatch publisher’s best inventory at the expense of the publisher’s interest.” On top of that, in 2017, Google decided to collaborate with Facebook where they are, as the complaint alleges, “literally manipulating the auction with minimum spends and quotas for how often Facebook would bid and win.” EBDA is Google’s way of maintaining its stronghold on the market. 

A trio of antitrust lawsuits

In Fall of 2020, Google found itself facing three antitrust lawsuits brought on by state and federal enforcers. All three cases make the same argument – it claims that Google has been “unlawfully maintaining monopolies through anticompetitive and exclusionary practices in the search and search advertising markets…” Then of course, each case has a few more accusations. 

Google’s response to the lawsuits have been simple: the changes made to Google search are designed to provide users with a better experience and redesigning Google search would harm quality of search results. In fact, Google points out that similar claims by these lawsuits have been rejected by regulators and courts around the world, including the U.S. Federal Trade Commission, competition authorities in Brazil, Canada and Taiwan, and courts in the United Kingdom and Germany.

Header bidding is here to stay

With all the said, header bidding is the key to a publisher’s success. If it’s a threat to Google’s existence, it must be that good, right? A competitive ad stack requires header bidding and an equal playing field needs tactics. Here are several tactics you can deploy to have an equal playing field against Google:

  • Leverage as many demand partners –  With more demand partners bidding on your ad slots, you’re creating competition for your ad inventory[7] and in turn, increasing your site’s revenue. Having multiple demand partners allows for different ad sizes and different types of ad formats (display, video, or native) to appear on publisher’s sites. There’s a wide range of CPMs between formats; a banner ad could have a $1.00 CPM[3], whereas video could be over $10.00 CPM.
  • Set floor pricing in Google Ad Manager[4] – By setting a price floor[8], you’re in control of the value of your inventory. Many publishers would prefer to apply higher price floors to Google’s AdX exchange than they apply to other exchanges, since the informational and other disadvantages Google creates for other exchanges often mean that AdX is willing to bid more than others. Those higher price floors for Google (or the lower price floors for others) require Google to compete more vigorously, i.e., bid more, for purchasing impressions.
  • Monitor and test performance[9] without AdX – A good strategy to have is monitoring key performance indicators like ad slot revenue, fill rate[13], bid-level data, CPMs, etc. Specifically, look at monitoring and testing your website without AdX and see how your site continues to perform. We’ve had instances where a publisher performs better without AdX and we remove them as a bidder[14].
  • Segment[15] inventory – Don’t adopt a “set it and forget it” mentality. It’s important to look at each ad unit[16] individually, determine their value and set a floor price accordingly. This can be done in groups or for specific units, but don’t let demand partners, especially Google, determine what your inventory is worth. 
  • Add high viewability[10] and CTR[5] ad units – At Freestar, our team is continuously strategizing with our publishers to ensure they are getting the most out of their ads and increasing yield[17], and one placement we highly recommend is desktop and/or mobile anchors. As anchor units allow ads to be on the user’s page for the entire duration of their site visit, your viewability values increase when they are enabled. Anchor units are a streamlined way to create additional, highly valuable inventory. They offer the benefit of being always viewable (an incentive to advertisers), and the ability to blend into most website themes and designs.

What you need to know  

If there’s anything you learned from this article, here is what I want you to leave with:

  • Try to become less reliant on Google. As the saying goes, don’t put your eggs in one basket. Diversify your demand partners, find new tools to use and other monetization platforms outside of Google.
  • There’s always two sides to a story. Google is depicting header bidding in a bad light because it’s advantageous to them. As the lawsuits state, header bidding is a threat to Google and Google will do what’s necessary to protect itself and its financial interests.
  • Keep an equal playing field with Google by deploying different tactics. 
  • Don’t be afraid to ask questions to the industry and Google. If it weren’t for industry stakeholders questioning Google and running tests, we wouldn’t have known what Google was doing. 

Conclusion

As a Solutions Architect at Freestar, it confirms my suspicions I had and highlights the importance of A/B testing. If it weren’t for the tests by different partners and ad solutions, we wouldn’t have known what Google was doing behind the scenes. The evidence was pieced together over time by running A/B testing, going through reporting thoroughly, and questioning the powers that be (aka Google).

Terms
1. programmatic advertising. Programmatic advertising entails using machine learning and technology suites to buy and sell ad inventory with a data-driven process.
2. dynamic allocation. Dynamic allocation allows publishers to maximize the yield on remnant inventory by giving Ad Exchange and AdSense a chance to bid on ad inventory.
3. Cost Per Mille/Thousand [CPM] ( CPM ) Cost per mille, or thousand (mille = thousand in Latin). A pricing model in which advertisers pay for every 1000 impressions of their advertisement served. This is the standard basic pricing model for online advertising. See also CPC and CPA.
4. Google Ad Exchange ( Google Ad Manager ) Ad Exchange is often referred to as the premium version of AdSense, and also a Google-owned ad network of sorts. To join Ad Exchange, publishers need to meet specific requirements such as 500 000 minimum monthly traffic, be invited or join through a Google certified partner. Recently Google has rebranded this product, and it is now called Google Ad Manager.
5. Click-Through-Rate [CTR] ( CTR ) CTR relates to how many times users clicked on an ad divided by the number of times that ad was displayed to users.

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