PROG I/O: Google Expands Exchange Bidding As Q3 Ad Revenue Surges

googlebinoimgGoogle is seeing strong growth in its dynamic allocation exchange bidding, countering the advantages gained by other exchanges via header bidding.

Six months ago, Google reversed its DoubleClick for Publishers (DFP) policy when it opened the server up to third-party exchanges. Since then, it’s more than doubled the number of outside exchange partners, adding Smaato, Sovrn and Cox’s Gamut Media alongside pilot partners Rubicon Project and Index Exchange. The number of publishers participating in the exchange has quadrupled.

“We deeply believe server-side will be a better user experience,” Jonathan Bellack, Google’s director of product management, said Thursday at AdExchanger’s Programmatic I/O conference in New York City.

Google’s point of view casts shade on the client-side header bidding innovations that are good for yield but add latency to the site-rendering process, a common complaint with tag-heavy ad tech services.

“It’s going to matter to advertisers,” Bellack said. “Just consider the impact on viewability when you add (as much as two to five seconds).”

Bellack also announced a Google “audience guarantee” capability at the conference that will help publishers digest an advertiser’s user list and forecast against that specific audience. Direct deals are conducted mostly in bulk – buying against impressions and pages – and in some ways have missed out on the campaign refinement that comes with programmatic.

Netflix is an early adopter of the audience guarantee product, which allows the streaming subscription service to make direct deals with publishers, drop in its own user list and ensure that its ads won’t be wasted on known subscribers.

“For all the excitement about auctions and indirect or remnant yield, the pubs we work with continue to make the lion’s share of their business through direct relationships,” Bellack said. “Publishers prefer revenue certainty over the risk of the auction, and advertisers prefer the inventory certainty.”

The direct-deal pool is a fast-growing source of programmatic revenue for Google through automated targeting and forecasting tools.

Google announced on Thursday that its third-quarter earnings reached nearly $22.5 billion over the past three months, a 20% increase from the same period last year. Advertising revenues clocked in at more than $19.8 billion, 18% higher than the $16.8 billion in ad revenues from Q3 2015.

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