The Value of Exchange Bidding

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Exchange bidding, also known as Exchange Bidding in Dynamic Allocation[1] (EBDA), is a server-side unified auction. It’s where ad exchanges and SSPs compete with Google Ad Exchange[3][2] to win impressions. This was Google’s response to header bidding[4] 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[5] 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?

  1. An ad request[6] is triggered and passed to the Ad Manager ad server.
  2. Ad Manager runs a unified auction to determine the best yield[9] for the available inventory[10].
    a) Ad Manager selects the best-trafficked line item[11] to compete.
    b) A bid request[7] 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.
  3. Finally, Ad Manager returns the request to the page and the winner’s ad is displayed on the publisher[12]’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 biddingHeader bidding
Auction typeServer-to-serverClient-side
Level of technical knowledge requiredMinimalAdvanced
AdvantagesReduced page latency and overall reduced ad complexityGreater transparency[8] and control, with better cookie[13] matching
DisadvantagesLess transparency, lack of cookie matchingIncreased page latency, increased ad complexity
PaymentsManaged by GoogleManaged 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.

1. 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.
2. Google Ad Exchange. 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.
3. Ad Exchange. An ecosystem through which advertisers, publishers, and networks meet and do business on a unified platform or system. An ad exchange allows advertisers and publishers to speak the same language in order to exchange data, set prices, and ultimately serve an ad. Popular Ad Exchanges include Google, OpenX, The Rubicon Project and AppNexus.
4. header bidding. Header bidding is an ad technology that allows publishers to earn to most ad revenue possible for their ad inventory by ensuring the highest bidding ad is served.
5. impression. Impression is when a user views an ad on a page or when an ad is displayed on a webpage.

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