Autotrader and Discovery explore ways to reduce operational costs of header bidding

Header bidding has been a welcome salve for publishers ever on the hunt for new ways to improve their programmatic advertising yields. But it has always had its drawbacks: page latency and operational costs for starters.

Now, publishers including Discovery and AutoTrader are looking for new ways to squeeze value from their header-bidding strategies and reduce the associated operating costs that have become a burden.

Both are beta partners for an open-source tool released by Rubicon Project, called Demand Manager, designed to absorb operational headaches and free up valuable resource. The ad tech vendor will provide technical and yield management support via a managed service.

Autotrader, which has deployed the tool in the U.K., and Discovery are both in the early stages of using the tool so haven’t yet been able to calculate the resource savings they will make. But both believe savings are inevitable.

“We’re expecting it to free up a lot of resource over time,” said Bill Murray, vp of programmatic solutions at Discovery, which has rolled out the tool in the U.S. market.

Publishers experienced a major boon to programmatic ad yields and overall revenues after the arrival of header bidding. But over time, that growth has plateaued, partly because of the increased operational costs to run it.

“We have generally seen some flattening,” added Murray. “There are times where we implement new technologies and see bumps, just not the meteoric rise we saw a few years ago. There has been some course correction in the way publishers optimize yield and the way advertisers are bidding. The first-price auction has had a big impact on that.”

Over time, media agency buyers have become more adept at bidding in header-bidding environments and, more recently, to adjusting from second-price to first-price bidding strategies. That increased bidding sophistication has naturally caused a reduction in the average publisher CPMs, according to Michael Barrett, president and CEO of Rubicon Project.

“When publishers initially brought in a unified auction bidders were caught a bit flat footed,” said Barrett. “Then the move from first- to second-price auctions was another way of publishers being able to gain an advantage. We’ve seen a flattening in CPMs as buyers have got more sophisticated at how to win in header bidding and how to work in a first-price auction. So the pendulum is swinging back [to favor buyers].”

Autotrader plans to move from its header-bidding offering to a server-side one, which was partly why it was drawn to the new tool, which will incorporate this capability. Where header-bidding drawbacks have largely centered on page latency, sever-side’s challenge is nailing match rates. But the publisher now expects to be able to onboard partners faster as a result of the tool and in doing so increase its match rates. Autotrader integrates with its SSPs via Google’s Exchange bidding product. Without this new open-source tool, the publishers wouldn’t have been able to service the demand those SSPs provide, according to Richard Robinson, head of programmatic sales for Autotrader.

Better servicing these additional demand sources should improve the cookie matching across both platforms from 40% to 80%, which will have a positive effect for its PMPs set up on those platforms as well as open marketplace demand, he added.

“Another advantage of the Demand Manager tool is they have integrated Programmatic Guaranteed into it, and there is the possibility of moving to a server-side SSP solution. That will enable us to do what would have previously taken us months on our own.

In 2015, when header bidding began its quick rise, ad tech vendors raced to fulfill the demand from publishers for header-bidding solutions. The result was the arrival of the wrapper in 2016 — a proprietary tech that typically favored the provider’s supply over any other vendor’s within that wrapper. At the time, publishers complained they weren’t always sure exactly what was happening in their wrappers.

Over time, those methods have dropped out of favor more, as the arrival of the open-source Prebid option developed by AppNexus and RubiconProject, began to be adopted by publishers. But this open-source option also added complexity for publishers.

“There is a common understanding of how the transactions are occurring [with the new tool],” said Murray. “It is not a proprietary black-box solution. It’s a tool that allows us to manage our prebids without having to have a tremendous amount of technical expertise to manage it.”

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