Google violating antitrust laws, Facebook violating norms of decency, Amazon taking of the world, and GDPR continuing to be confusing. Last week was actually a pretty normal week in many respects.Read More
Amazon has something of a monopoly on on-Amazon conversion data, as well as overall e-commerce data. As the company increases its share of e-commerce, this data will become a "walled garden" of its own.Read More
Amazon recently announced a server-to-server header bidding solution. For an overview on header bidding generally, see the previous Lift Letter on the same subject: Header Bidding. This has the potential to be very important in the development of ad tech, so it's worth discussing in more detail.
Google's preferential treatment of AdX - and the revshare that comes with it - is most at risk with header bidding's proliferation (one could also question the long-term strategic value of DFP if header bidding really catches on, but that's a whole other can of worms). As a result, Google created an exchange bidding program. This is server-to-server protocol where companies like TripleLift would theoretically bid into AdX/DFP. In this implementation, there is no client-side code - just an ad call by the browser. Much like a normal ad exchange, Google would then issue ad requests, but include header partners as well. This means that there are far fewer ad calls on the browser and a much better user experience. But Google takes a revshare here - and currently doesn't disclose the revshare - and thus will likely disadvantage partners against its own demand, and otherwise take a cut. From the perspective of a publisher, it's a better user experience, but Google is keeping much of the upside of header bidding, as opposed to the publisher for client-side opportunities. Google also may keep partners' bidding data. Payment also would need to go through Google, meaning partners wouldn't be able to have direct relationships with publishers. Finally, in its current implementation, Google doesn't support PMP deals through other partners.
Amazon's solution - to some degree - is the best of both worlds. First, it's a server-to-server implementation. This means there is a single request per ad call (it's actually one more ad call per ad slot than Google, but much better). It also means that a publisher could have many more partners without directly impacting their user experience, because the partner requests are made on the server side. Amazon charges the publisher a CPM fee for using its service, as opposed to a revenue share (1 cent CPM) and it allows the partner to maintain a direct relationship with the publisher - meaning there is real transparency on fees.
There are concerns about whether Amazon will actually run honest auctions, or instead prioritize its own bids when it chooses to. This may not be audit-able by the publisher. Further, Amazon may be collecting everyone's bid data, allowing it to be the least it can and potentially undermine overall publisher monetization. Finally, it's unclear that they will support PMPs and the like.
Google's exchange bidding program is certainly interesting - it opens access to publisher inventory that was otherwise not accessible. That said, it is a markedly worse outcome for us than either client- or server-side wrappers that allow price transparency and direct publisher relationships. It will be interesting to see where this takes the publisher ecosystem, but it definitely increases the value of things like formats, where we can make a unique name for ourselves and truly differentiate. Of course, publisher-direct is always the best - and that's where we always look to be. But technologies like these go a long way to improve our ability to have business relationships with publishers.