A study by OpenX showed there was a 48% average increase in the yield of publishers using Exchange Bidding. This study calculated its result basis the revenue generated by publishers in a span of 12 months.

Exchange bidding service has been available for DFP publishers since April 2018. However, there are still some publishers who feel delusional about exchange bidding. Here’re 5 things about Google exchange bidding that will give you clarity.

#1 What is Google Exchange Bidding?

The Google exchange bidding (now Open Bidding) process uses a server-to-server connection to communicate and exchange ad placement information. This is a server-side process where exchange networks and SSPs bid on the inventory in a unified auction.

Exchange bidding is often stated as Google header bidding and also known as EBDA (Exchange Bidding in Dynamic Allocation). Google has partnered with multiple exchanges to make the services more accessible for publisher via Doubleclick. To understand how does Google exchange bidding work, let’s start by understanding why we need it in the first place.

According to Google, exchange bidding is designed to reduce the complexity without affecting the user experience. The complexity, mentioned by Google, is in reference to the header bidding complexity.

Since the announcement of EBDA, it has been greatly compared with header bidding because these methods efficiently optimize unsold inventory. We will get to the difference between these two later. Let’s understand the working of exchange bidding first.

#2 How does Exchange Bidding Work?

Take a look at this image explaining the exchange bidding process:

1. As soon as a visitor opens a webpage, the ad request is triggered. This request is taken to Ad Manager and from here, Ad Manager takes the charge.
2. Ad Manager runs an auction to find the best bid for the available inventory.
3. Ad manager looks for best-fit ads (shape, size, format, and traffic) for the available ad space and places them in a line.
4. The requests are then sent to all the lined items and their yield partners to place their bids.
5. Yield partners then submit their bids and the highest and most eligible bid is returns to Ad Manager.
6. A winner is selected and Ad Manager completes this unified auction.
7. Finally, Ad Manager returns the request to the page and the winner’s ad is displayed on publisher’s ad space.

As you can see, the system is allocating ads dynamically in real-time. Also, the entire process is handled by Ad Manager in a unified auction which reduces the time taken to complete an entire auction.

#3 Getting Started with Exchange Bidding

In order to get started with EBDA, a publisher needs to check whether his/her network is compliant for exchange bidding or not.

If your ad network is one of Google’s public exchange partners, you can get started with EBDA instantly. Alternatively, you’ll need to contact Google.

Moreover, you need to have a Google Ad Manager account to enable exchange bidding. After you’re done with account creation, you need to create a company for exchange partners to place a bid on. Once the bidding is started, you can keep an eye on yield and manage it.

#4. What’s the Difference Between Exchange Bidding and Header Bidding?

In theory, both header bidding and exchange bidding are designed to put ads in front of the right audience to optimize publisher’s inventory.

Header bidding was introduced to resolve the problems caused by the waterfall setup. In the waterfall process, a lot of unsold inventory was being left behind. This is when header bidding came to rescue.

Using header bidding, a publisher gets to open his inventory to several demand partners before taking it to the ad server. And as expected, a publisher is able to increase ad revenue owing to this process.

Header Bidding sounds good. So why do we need Exchange Bidding?

Yes, header bidding is a good-enough method to deal with unsold inventory. But it has some disadvantages as well. Header bidding is a complex process that requires high-level technical knowledge. Also, header bidding works on the client side.

This means when a visitor launches a web page, a bunch of browser requests are followed in order to show ads, directly resulting in increasing in page load time. An increase in page latency has put off many publishers to choose header bidding.

How does Exchange Bidding help?

Unlike header bidding, exchange bidding is a unified process which minimizes the complexity. Also, instead of running on visitor’s browser, exchange bidding run on the server-side reducing the complexity and page latency for publishers

However, exchange bidding is not perfect either. It’s not as transparent as it was expected because it doesn’t offer full visibility of the auction process. Though on the contrary, header bidding is a more transparent process than Google exchange bidding.

#5. Any Alternative to Header Bidding and Exchange Bidding?

As you have seen, header bidding and exchange bidding have their advantages and disadvantages. So, publishers usually ask, “is there any method that gives us all the advantages without having to face the disadvantages?”

The answer is Server-To-Server Header Bidding.

S2S header bidding is more of an improvement to header bidding. In S2S bidding, by taking the bidding process from the client side to the server side, a lot of issues were resolved. Page latency has to be one of the most important issues resolved by S2S header bidding.

Understand it this way, S2S header bidding is an improvement of header bidding. Then Google adopted the improvement and provided Google Exchange Bidding.

The only problem using the server-to-server header bidding is, it lacks in matching right advertiser for the available publisher’s inventory. Although, Google exchange bidding is one of the fairer auctions giving equal chance to Google and AdX to bid on an inventory.

Conclusion

There is no perfect bidding method without any drawbacks. In Google exchange bidding’s defence, it’s a new technology making its way in the Ad tech industry. For publishers depending on Google, EBDA can be a great method to monetize their inventory.

Working on server-side and removing a few seconds from load time might seem like a small thing. But it can work miraculously when comes to revenue generation.