Exchange bidding, also known as Exchange Bidding in Dynamic Allocation (EBDA), is a server-side unified auction. It’s where ad exchanges and SSPs compete with Google Ad Exchange to win impressions. This was Google’s response to header bidding and the need to reduce the complexity of header bidding.
Prior to switching to a first-price auction, Google Ad Exchange had the “last look” at all impressions and would have an opportunity to place the last bid. With last look, Google could essentially out-bid advertisers of an impression by a very small margin. This wasn’t particularly liked by many publishers. Google’s introduction of exchange bidding allows other exchanges and SSPs to compete with Google Ad Exchange in a unified auction. Thus, creating an equal playing field.
What’s the process of exchange bidding?
- An ad request is triggered and passed to the Ad Manager ad server.
- Ad Manager runs a unified auction to determine the best yield for the available inventory.
a) Ad Manager selects the best-trafficked line item to compete.
b) A bid request is sent out to all yield partners (Ad Exchange, third-party exchanges, and networks).
c) Yield partners run their own auction and return to Ad Manager with the most competitive bid.
d) Ad Manager hosts a unified auction and selects a winner. - Finally, Ad Manager returns the request to the page and the winner’s ad is displayed on the publisher’s ad space.
Why exchange bidding?
Exchange bidding is beneficial to publishers for the following reasons:
Easy implementation — Ad Exchange is handled server-side. There is nothing to be installed on the publisher’s website(s). This also means there is no need for updates or maintenance.
Reduces latency — Exchange bidding runs server-side. Meaning no additional JavaScript needs to be loaded in the web browser. Pages now load faster. In addition to not requiring additional JavaScript, exchange bidding happens within Google’s infrastructure. This makes the response time faster for bids, ads being served, and loaded pages.
Better user experience — More publishers prefer this process as reduced latency produces a better user experience.
What’s the difference between exchange and header bidding?
| Exchange bidding | Header bidding | |
| Auction type | Server-to-server | Client-side |
| Level of technical knowledge required | Minimal | Advanced |
| Advantages | Reduced page latency and overall reduced ad complexity | Greater transparency and control, with better cookie matching |
| Disadvantages | Less transparency, lack of cookie matching | Increased page latency, increased ad complexity |
| Payments | Managed by Google | Managed by individual publishers |
There will always be pros and cons between header bidding and exchange bidding. Neither is necessarily better than the other. Header bidding takes place in the user’s browser before the highest bid is sent to Google Ad Manager to conduct an exchange bidding auction. These auctions can work cohesively together or separately. As a publisher, it’s about your needs and what you want out of your ad monetization.