Google Changes its Last Look Policy

In the past year, as publishers have fought to preserve their advantage in a world controlled by big platforms such as Facebook, Google, and perhaps Snapchat, more and more of them have gone to header bidding, or “first look.”  According to AdProfs excellent Beginners’ Guide to Header Bidding,

Header bidding is an additional auction that takes place outside of the ad server, in the header of a web page, which loads before anything else on the page. The header typically contains metadata about the page and calls scripts used for formatting the style of the page, tracking, and so on. Because of this, it’s an ideal area to conduct a new auction.”

Header bidding shifted control from Google’s adserver, DoubleClick for Publishers (DFP) back to the publisher, and many publishers in our network have embraced it. We support it with all our technical resources and were influential in making it work early in the game to create an advantage for our publisher partners.

But no one in the industry thought that Google would sit back and take the loss of its hegemony lightly, and a few weeks ago Google decided to contest the advantages of header bidding by changing its own exchange rules. From AdExchanger:

“We are collecting the price each exchange would pay, including AdX, and then putting it in a unified auction where the highest price wins,” Bellack said.

Here’s how the programmatic auction will work: All EBDA exchange participants – including Index Exchange, Rubicon Project, PubMatic, Sovrn, Smaato and Gamut – submit their final bids. The DoubleClick AdExchange (AdX) also submits its final bid. And the best price wins.

Previously, AdX would wait for all those other exchanges to submit their bids, and then give itself a chance to outbid the winner. So if Google’s exchange had two bids of $1 and $5, it would be able to beat a $4 bid from an outside exchange. Under the new auction rules, it would submit a bid of $1 (the second price) and lose the auction.

While at a glance this might seem bad for the publisher, since Google is restrained from submitting a higher bid, in fact the outcome should be the same given the rules of second-price auctions. In the above example, the impression clears at $4 regardless of which exchange takes it.

There’s a real possibility that Google is leading the way here to a more transparent and responsible way of bidding on publisher inventory that will not only make things fair for the publisher, but also for the exchanges. However, Google is larger than all the other exchanges and can still submit more bids. In response, other bidders, like Amazon, have instituted server-side wrappers in response, which makes the process a bit less transparent.

We are a transparent platform, and that’s why our partners like us. We’re waiting for the remainder of the industry to catch up with us.