When It Comes To Header Bidding, Will Google Play Fair With FLEDGE?

The Sell Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Lukasz Wlodarczyk, VP of programmatic ecosystem growth and innovation at RTB House

Google and Meta (formerly Facebook) have come under fire for a secret agreement known as Jedi Blue. Back in 2018, Google allegedly promised Facebook preferential treatment in ad exchange auctions in return for Facebook withdrawing its support for header-bidding auction solutions, which directly competed with Google’s own.

Google has never had a warm relationship with header-bidding solutions. Indeed, Google implemented Exchange Bidding in Dynamic Allocation (EBDA), also known as open bidding, which became a server side competitor to header bidding.

Now, a key proposal from Google Chrome’s Privacy Sandbox, FLEDGE, presents an opportunity for a more transparent process. Moving two-level auctions to the browser seems perfect for client-side auctions, just like the header-bidding solutions that publishers like. However, there are concerns around whether the FLEDGE proposals will treat all supply-side platforms (SSPs) equally in programmatic auctions within Google’s marketplace.

In theory, the FLEDGE proposal offers a solution comparing all bidding partners on a level playing field, similar to how today’s header-bidding solutions work. However, there are question marks around whether this is the path that the Google Ad Manager team will choose to go down.

Can Google play fairly?

Current header-bidding solutions are a work-around to allow external demand to compete in Google Ad Manager. Header-bidding demand is transparent and easily auditable in a browser. The logic to select from that demand is governed by an open-source consortium and configured by the publisher. As a result, the header-bidding auction is auditable by the publisher and auction participants.

However, as it stands, the header-bidding auction winner is passed into Google Ad Manager so that it can compete in an (opaque) ad server auction. Google Ad Manager performs the final ad selection, choosing between header-bidding demand and Google Ad Exchange demand. This leads to accusations that Google sometimes unfairly favors its own demand during auctions.

In the future, will Google try to retain its position of top-level auctioneer? There’s no straightforward answer yet.

Industry experts like Joel Meyer, chief architect at OpenX, and Aram Zucker-Scharff, engineering lead for privacy and security compliance at The Washington Post, all agree that transparency of auctions and equal treatment of all market participants should be a top priority for Google. And Google has already shown its willingness to adapt its proposals based on the feedback of the global ad tech community.

But the debate surrounding the future of ad auctions is still a live one.

A more level playing field

To move forward, the industry needs an independent top-level auction handler (independent from a specific ad server) that will guarantee a level playing field for advertisers, DSPs, SSPs and publishers. The auction should be equal for all participants. 

There is no specific reason why Google Ad Manager should fill the role of “top-level” auctioneer. It could just as likely participate in component auctions on an equal footing with other SSPs. Other entities – be it the SSPs or, for example, Prebid – should be just as capable of taking the role of “top-level” auctioneer.

The Prebid model as an open-source code is desirable due to its impartiality. An impartial top-level auctioneer would allow publishers and buyers to transact openly and fairly, with assurances that no party is preferred – a statement that can be audited in an open codebase if needed. Support from the Prebid community and open Prebid model would guarantee higher adoption, better trust and broader support from publishers and ad tech vendors in the origin trials. This would lead to a multi-SSP auction landscape, which could deliver real benefits for the entire digital ad ecosystem.

Under this model, Google Authorized Buyers would participate in component auctions equally with other SSPs and have no way to skip bids directly to the top-level auction. Likewise, Google would not have any means to create artificial technical blocks to other SSPs willing to participate directly in FLEDGE auctions, which would, in turn, incentivize them to participate via EBDA (open bidding).

Publishers and their vendors should also have the technical means to compare demand in GAM without using EBDA. 

Developing a solution based on these proposals will lay the foundation for a more transparent and equal playing field for the entire industry to the benefit of everyone.

Follow RTB House (@RTBHouse) and AdExchanger (@adexchanger) on Twitter.

Enjoying this content?

Sign up to be an AdExchanger Member today and get unlimited access to articles like this, plus proprietary data and research, conference discounts, on-demand access to event content, and more!

Join Today!