The Value of Exchange Bidding

By Adrian Piattelli |
July 24, 2019
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0 Comments
Google First-Price Auction-03

Ad Ops & Digital Publishing News - Sortable

Exchange bidding, also known as Exchange Bidding in Dynamic Allocation (EBDA), is a server-side unified auction where ad exchanges and SSPs compete with Google Ad Exchange to win impressions. Exchange bidding was Google’s response to header bidding and the need to reduce the complexity of header bidding. 

Prior to switching to a first-price auction, Google Ad Exchange had the “last look” at all impressions and would have an opportunity to place the last bid. With last look, Google could essentially out-bid advertisers of an impression by a very small margin which wasn’t particularly liked by many publishers. Google’s introduction of exchange bidding allows other exchanges and SSPs to compete with Google Ad Exchange in a unified auction creating an equal playing field.

What’s the process of exchange bidding?

  1. An ad request is triggered and passed to the Ad Manager ad server.

  2. Ad Manager runs a unified auction to determine the best yield for the available inventory.
    a) Ad Manager selects the best trafficked line item to compete.
    b) A bid request is sent out to all yield partners (Ad Exchange, third-party exchanges, and networks).
    c) Yield partners run their own auction and return to Ad Manager with the most competitive bid.
    d) Ad Manager hosts a unified auction and selects a winner.

  3. Finally, Ad Manager returns the request to the page and the winner’s ad is displayed on the publisher’s ad space.

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Image source: Google Ad Manager

Why exchange bidding?

Exchange bidding is beneficial to publishers for the following reasons:

Easy implementation — Ad Exchange is handled server-side so for publishers, there is nothing to be installed on their website(s). This also means there is no need for updates or maintenance.

Reduces latency — Exchange bidding runs server-side, which means no additional JavaScript needs to be loaded in the web browser, which increases page load speeds. In addition to not requiring additional JavaScript, exchange bidding happens within Google’s infrastructure, making the response time faster for bids, ads being served, and pages loaded.

Better user experience — More publishers are preferring the exchange bidding process when reduced latency produces a better user experience. 

What’s the difference between exchange bidding and header bidding?

  Exchange bidding Header bidding
Auction type Server-to-server Client-side
Level of technical knowledge required Minimal Advanced
Advantages Reduced page latency and overall reduced ad complexity Greater transparency and control, with better cookie matching
Disadvantages Less transparency, lack of cookie matching Increased page latency, increased ad complexity
Payments Managed by Google Managed by individual publishers

 

There will always be pros and cons between header bidding and exchange bidding. Neither is necessarily better than the other. In fact, header bidding takes place in the user’s browser before the highest bid is sent to Google Ad Manager to conduct an exchange bidding auction. These auctions can work cohesively together or separately. As a publisher, it’s about your needs and what you want out of your ad monetization. If you’re interested in exploring exchange bidding, Sortable can help. We are partnered with Index Exchange, OpenX, Rubicon, PubMatic, and Yieldmo (among others), all of which all support EBDA.

If you want to learn more about exchange bidding or find ways to maximize your ad revenue, contact success@sortable.com. If you aren’t a Sortable customer but want to learn how Sortable’s solution stacks up against the competition, and has the best analytics platform in the industry, request a demo today and start on your path to earning more. 

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