What Will Be the Fall-Out from Facebook’s Push into Header Bidding?

Paul GubbinsFacebook’s entry into the header bidding market yesterday sent shockwaves through the sell-side market. Here programmatic expert Paul Gubbins explains the likely impact on the rest of the market.

The news yesterday that Facebook Audience Network demand is going to be made available via several ad tech companies is a great endorsement for the practice of header bidding and will also provide a welcome boost to publishers’ mobile yields.

So how does it work & what exactly does it mean? Dependent on which research you read, the majority of premium publishers are now supporting client-side header bidding in order to help them capture a higher yield from their buy side programmatic partners. Put simply, by tapping into demand from multiple sources simultaneously, they can see more bids and get a better view of the ‘true’ value of their inventory. It isn’t a panacea for the industry’s ills, but it has been a step in the right direction.

In order to carry multiple header tags – i.e. the tags through which bids can be received, supplied by vendors like Rubicon Project, Index Exchange, PubMatic et al — publishers adopt a container (also known as a ‘wrapper’) to house these header tags in. Working this way reduces page latency and enables the publisher to set a holistic time out window for the SSP bid responses i.e. the publisher can manage all of the bids via the wrapper

So where does Facebook fit into this? Well, for some time Facebook has offered advertiser’s access to the Facebook Audience Network (FAN), which announced a $1 billion revenue run rate in Q4 2015 (the last figure that was made available as Facebook don’t break down the FAN revenue in their results). So publishers have been able to sign up to in order to capture Facebook demand for some time now, but thus far this demand was separate to any header bidding demand, and it meant additional work for publishers to support and implement.

This recent announcement from Facebook states that they have decided to partner with a handful of ad tech companies that offer publishers a wrapper (Index Exchange, Prebid.js, Amazon and others). So now publishers can capture mobile web demand via this wrapper from Facebook FAN buyers.

This will only strengthen header bidding as it will enable a publisher to run a unified auction of SSP, Exchange and Facebook demand all within the wrapper. More importantly, this comes at a time when many publishers are struggling to capture a mobile yield that has been comparable to the kind of revenues they have become accustomed to with desktop. A  demand partner like Facebook competing alongside other SSPs in the auction such as Index Exchange and Rubicon Project is only going to help drive up yield and boost fill rates for mobile inventory.

How FAN’s Entry Will It Impact Other Ad Tech Vendors?

At the header tag level, this move won’t exclude other ad tech vendors from placing their tags within publisher wrappers, although FAN’s demand will provide some hefty competition and will in all likelihood squeeze some vendors out, as each wrapper typically contains approximately six tags.

At the wrapper level, things are going to become a bit more difficult for those who can’t tap into FAN demand. Currently Facebook are only partnering with Prebid.js, Amazon Publisher Services, Index Exchange, Media.net, Sonobi and Sortable, which will strengthen those vendors whilst weakening excluded rivals who are going to find it much harder to persuade publishers to adopt their wrapper.

We’ve seen one interesting tactical move from Rubicon Project on this front. Last week they announced that they are to support the open source Prebid.js wrapper, which might have come as a surprise to those who expected they would create their own. However, as their wrapper was not certified by Facebook, they probably felt that trying to get adoption could be an uphill battle, so a better route would be to get header tag adoption and focus their efforts on being a preferred demand rather than wrapper partner.

All of that said, we need to bear in mind that server-side auctions will soon be adopted by many publishers, which will eliminate the need for wrappers and allow publishers to tap into unlimited demand sources. Today, header bidding takes place on the client-side (in the browser), which is why there is a limit of up to six vendors on each page, as having any more would increase latency and disrupt the user experience for the person consuming the content. With server-to-server auctions, the auction takes place outside of the browser where latency isn’t an issue for the user, so rather than facilitate multiple calls to and from the web page, the auction is held after one call is sent to an external server. Companies like Amazon have already made moves to the server-side and we can expect more to follow in 2017.

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