Rubicon: Opening of Google Dynamic Allocation May Reduce Need for Header Bidding in APAC
Header bidding has been touted in Australia as a way to increase inventory yield and establish better transactions, but Google’s move to open up external access to Dynamic Allocation has effectively eliminated the need for the tool, says Rubicon Project’s Asia-Pacific Japan managing director, Rick Mulia. He writes in this industry byliner that header bidding also will result in lower CPMs in the long-term.
For the past couple of years, major Australian publishers and private marketplaces have touted the notion of holistic yield and debated whether it is achievable or simply an ideal. For those who don’t know much about it, it is where the allocation system simultaneously takes all demand sources (performance networks, direct buyers, and programmatic) into account as a whole to assess which provides the best opportunity for each impression.
The aim then was to be able to create competition between inventory traditionally negotiated directly with advertisers and inventory made available to the market via ad exchanges, made possible thanks to the development and maturity of programmatic.
Rick Mulia, Asia-Pacific Japan MD, Rubicon Project
Pretty much overnight, the Australian ad industry started talking about header bidding as a possible solution, using an advanced programmatic technique that enables publishers to offer inventory to multiple ad exchanges simultaneously before making calls to their ad servers.
The idea here is to let multiple demand sources bid on the same inventory at the same time, so publishers can increase their total yield and make more revenue while, on the other side, agencies and advertisers would be able to better transact across all inventory and devices.
In short, improvements in the header bidding technique now enable publishers to create competition not only between their own direct-sold inventory, but also between the supply side platforms (SSPs) themselves for the same impression. By combining their inventory into a single server-side supply, publishers can sell inventory on a per-impression basis, giving them more transparency into how much their impressions are actually worth. It eliminates the need for pushing inventory back and forth, which is inefficient and wasteful.
Header bidding remains a hot topic in the industry because it introduces partial competition between direct and indirect sales. It is not, however, a new idea and more than 70% of publishers have already adopted it, according to a recent report by BI Intelligence.
So, what’s the big deal? The reality is that header bidding actually offers nothing new, from a purely technological point of view, but it does from a marketing perspective.
Bypassing need for header bidding
It is possible for header bidding, if configured as a tool to create competition between several SSPs, to increase a publisher’s fill rate in the short-term. In the medium- and long-term, however, CPMs will inevitably fall.
Furthermore, Google recently announced that they had begun testing with Rubicon, among others, allowing ad exchanges – outside their own AdX – access to its Dynamic Allocation product. This essentially removes the need for header bidding.
Google have said they would allow bidding against direct-sold inventory, without having to go through AdX, if the exchange, or source of demand, was reputable and the publisher wanted integration with DFP (DoubleClick for Publishers).
This move is good news for publishers in Asia-Pacific, as it gives them exactly what they want.
Finally, we must not forget a vital element in all of this: buyers, whether they are agencies, trading desks, or advertisers, hate to see the same inventory from the same URL in several ad exchanges. This creates a bigger workload for them and adds indecision to what should be an automated process.
It is an error of judgement to assume buyers will buy a publisher’s inventory on every platform on which it exists. They will only buy it once, at the lowest price, and quite rightly too. In the end, a single platform for each inventory is the best solution, making it possible to fully control marketing of that inventory without risk.
What the industry now needs is a safe, transparent, and healthy programmatic ecosystem for buyers and sellers across Asia and Australia.
Google have now embraced open dynamic allocation, and that’s a positive move for publishers, as it allows them to generate more revenue without compromising the user experience that header bidding has been guilty of in the past.
But, will we see header bidding disappear? The short answer is this remains to be seen. We need to watch how the market reacts to Google’s move to simplify the buying process. At the moment, it seems a good thing for publishers and buyers to be able to increase transparency, as well as enable them to control their inventory as they see fit.
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