AppNexus Strikes Back Against Google’s Attempt To End Header Bidding

AppNexus-No-To-EBDASince Google opened up its ad server and brought exchange bidding to dynamic allocation a month ago, publisher ad tech and media companies have been asking many questions but receiving few answers.

People in the industry want to know: How much will Google charge? Nobody seems to know. What kind of data will publishers be able to access? Unclear. Where is the proof that Google won’t prefer itself over everyone else? Nobody’s seen it.

AppNexus, too, faced its own barrage of inquiries from partners wondering if it would participate in Google’s project to end header bidding, which won’t be ready for at least a couple of quarters.

Since Google hasn’t adequately answered questions about how the project will work, AppNexus has preemptively decided not to participate. Instead, the company is doubling down on header bidding, according to Tom Shields, AppNexus’ SVP of publisher strategy.

AppNexus will officially support its header bidder within Index Exchange’s wrapper. Index Exchange will do the same, putting development resources behind its integration with the AppNexus-created PreBid wrapper.

The official handshake between the two companies stands to reduce friction in the header. Publishers can rely on the companies to support and fix any header bidding issues, such as quickly incorporating feature updates and making sure those updates don’t negatively affect or break an integration.

“Here are two companies that are, frankly, fairly competitive, but this [header bidding] trend is beyond us,” said Index Exchange CEO Andrew Casale. “If we find a way to ease publisher burdens and remove friction, we can push this trend forward faster.”

Each company can look at the other’s code to ensure it is being treated fairly by the wrapper and its data isn’t being used for another’s gain. Provided that both parties can see each other’s code and audit it, Casale expects similar partnerships to follow.

Officially supporting partners’ wrappers makes managing multiple partners in the header just a little bit less of a hack.

“Everything starts as a hack and becomes more and more stable and built into the infrastructure,” said Shields, the father of early ad server NetGravity, which was bought by DoubleClick. In its first iterations, the ad server had some hack-like qualities to it, he remembered.

So while Google may have opened up exchange bidding in dynamic allocation to quash header bidding, expect header bidding tech providers to fight back by improving it.

That’s because there’s a lot of money at stake.

For example, many programmatic-focused publishers who add header bidding see Google’s share of revenue decline from 90% to just 40% to 50%, according to Chris Reid, founder of revenue mediation startup Sortable. A publisher’s header bidding partners, not Google, benefit from that influx of revenue from publishers.

If companies like AppNexus refuse to participate in Google’s exchange bidding in dynamic allocation [EBDA] product, will it sink it? Given the product’s early stage, it is difficult to say.

“The burden is on Google is to prove that EBDA works and to answer fundamental questions [about the program],” Shields said. “Anyone who refuses to answer some basic questions is going to have a hard time proving that EBDA works.”

Google’s early partners include Rubicon Project and Index Exchange. PubMatic joined the pilot program a week after launch, and OpenX hasn’t been publicly associated one way or the other with the project.

Index Exchange is participating in EBDA because “it believes in choice,” but Casale is betting header bidding sticks around and continues to improve, even once Google’s product gets off the ground.

“Given the growth of integrations, and the resulting transactions through this integration point, [header bidding] feels more like programmatic done right,” Casale said. “A tag in the ad server waterfall is starting to feel more like a hack.”

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