In April of 2016, Google turned the ad tech world on its head when it announced that it was in the process of testing a pilot program that would give all bidders equal footing in the competition for ad inventory on websites. Industry media erupted, proclaiming that the program, which the search giant dubbed exchange bidding in dynamic allocation (EBDA), was the death knell for header bidding.
Publishers and demand sources have been fans of the bidding tactic because it gives them a head start and an edge on submitting bids on impressions. It accomplishes this in two ways: by allowing partners to act before the ad call goes out and by providing precise tags within the ad server. This gives partners the power to compete with AdX’s real-time bids, theoretically decreasing the chances that publishers will lose money due to inaccurate bid impressions. Historically, it has been used by competitors of Google to reclaim their stake in the auctions.
Debunking the Mystery of EBDA
Header bidding was created in response to discord in the ad space over the information advantage Google held in auctions. It gets its name from the code, placed in the headers of websites, that displays ad inventory for rival exchanges. They could access this information before Google, essentially cutting in line to bid for desirable impressions.
With EBDA, Google is making the auction process more transparent by allowing rival exchanges to view the same information available to Google’s ad exchange. It is a major departure from the previous policy, which weighed heavily on publishers. Now, AdX will shoulder the burden.
Unlike in header bidding, publishers can invite SSPs and trusted third-party exchanges to submit real-time prices using industry-standard RTB calls. The publisher’s reservation campaigns and DoubleClick Ad Exchange will also toss their hats into the ring. In the end, the highest-paying ad will prevail.
The Industry Impact of EBDA
The rise of EBDA will not necessarily precipitate the demise of header bidding. First and foremost, the bidding tactic’s future depends largely on just how open Google makes dynamic allocation. If publishers are left wanting more, header bidding may remain available as an option.
In order for EBDA to obtain a foothold, it must also deliver on its promise that publishers can work directly with the demand partners they find most desirable. Its success hinges on demand partners benefitting, as well; if EBDA pushes a tax requirement on demand partners, header bidding could retain its advantage.
In a competitive marketplace, the two methods can co-exist, with a number of formidable companies creating their own server-side integrations. Ultimately, in order to succeed, they will need to develop an effective publisher product before the servers who are also in the game build server 2 server connections. This equation is clear: publisher product plus server connections equals winners.
Google stands to gain a great deal if it can gain favor with the publishers that AdX and the information imbalance alienated. In fact, the number of publishers stepping up to partner with Google in the EBDA pilot continues to grow. Regardless of the outcome, this is undoubtedly a time of epic transformation for the ad tech space.