5 QUESTIONS TO ASK WHEN CONSIDERING SERVER SIDE HEADER BIDDING

Transcription

1 5 QUESTIONS TO ASK WHEN CONSIDERING SERVER SIDE HEADER BIDDING

2 Introduction Server side (s2s) integrations have existed in programmatic advertising for nearly a decade, having been the preferred method of integration between DSPs and exchanges during that span. Yet this integration type is only now being considered for header bidding, and quite tentatively at that. The obstacle that has challenged the industry in its shift from client side to server side header bidding has not been technology, but trust. With s2s being a more opaque integration, exchanges were previously hesitant to cooperate within an environment that lacked the transparency inherent in client side header integrations. A recent shift towards s2s by larger tech giants has to an extent normalized this integration, and incidentally paved the way for independent exchanges to partner together to embrace s2s, and create a new choice for publishers hoping to enhance user experience and monetization without sacrificing transparency and fairness. 2

3 Before we dig into the specifics of s2s, here s a quick refresher of header bidding and header bidding wrappers. Header bidding is a process facilitated by a snippet of JavaScript in the header of a webpage that allows publishers to auction ad impressions in a flat parallel auction that can include multiple participants. This was a hugely impactful advancement to inefficient sequential auctions conducted in the waterfall era of programmatic. A wrapper (also known as a container or container tag), was the natural progression of working with multiple header bidding partners. Rather than each partner s client side header bidding integration sitting on page, individually managed by a publisher, one technology acts as a wrapper and can call (or wrap ) multiple header bidders. This single point of integration allowed publishers to easily monitor and manage multiple header bidding partners for the first time. A wrapper can either perform its functions of calling bidders on page so that every call runs through the browser, known as client side, or more recently, it can also operate server side conducting those calls outside of the client browser (also known as server to server, or s2s). There are discrete advantages to both solutions and some sizeable trade-offs involved. So, how does a media company decide how to operate their wrapper? We ve put together a few questions to help you through the process. Figure 1 Client Side Advantages: Disadvantages: Inherently transparent Direct user sync Potential to be unreliable Higher latency Limited capacity for partners Server Side Advantages: Disadvantages: Reliability of connections Low Latency Capacity for many partners Can be opaque Indirect user sync 3

4 1 How Will This Impact User Experience? There are two core factors that impact latency in a wrapper integration: connection based latency - how long it takes to initiate a request, and locational latency - comprising the round trip of the distance that must be traversed between the user, wrapper, exchanges, and DSPs. Let s take a closer look at each. Connection-Based Latency In a traditional client side integration, the wrapper makes a call to each exchange via the user s browser. These ad calls are processed alongside a massive amount of other requests like images, fonts, videos, audio, and everything else that makes a website worth visiting. There are a finite number of items the browser can process at once, and the browser decides the priority. This means that calls related to header bidding can become heavily delayed. 4

5 Figure 2a Figure 2b User/Browser Data center co-location User/Browser Integrated Exchanges DSPs 40ms Exchange/W rap p er 0ms 15ms Integrated Exchanges 0ms DSPs Exchange/W rap p er 5ms Co-location allows for lightning fast communication via direct connection, enabling more time for the auction s2s integrations are not a cure all new latency can be introduced without advanced infrastructure 5

6 Index Exchange adapted its technology early-on to be browser friendly and lightweight to browser connections, requiring only a single call (single request architecture), regardless of the number of ad slots on any given page. This significantly reduces the impact of connection-based latency. Comparatively, in a server side integration, rather than call every single exchange individually (even multiple times) via the browser, the wrapper makes a single client side call to its server, which then calls the exchanges server side. This creates an environment in which multiple exchanges can be called reliably and simultaneously, without being at the mercy of the browser. Unlike the browser on a user s mobile phone or computer, the servers used for this are specialized machines built to handle massive quantities of concurrent requests without negatively impacting latency or user experience. Locational Latency With s2s, there should be an increased focus on Location Based Latency wherein we consider each leg of the journey as well as the speed (or latency) of the round trip for the wrapper to make its initial call to all of the integrated exchanges and return the clear price to the ad server. When we move the core functions of the wrapper from the user s browser to the server, we are creating a distance between the user and the wrapper that must be traversed. This distance, along with the distance between the wrapper server and the servers of the 3rd party exchanges, as well as those 3rd party exchanges to their DSPs/buyers are important to consider, since a weak link in this chain can bring new latency into the equation. Speed and infrastructure go hand in hand, so co-location and data center distribution must be seen as a key consideration of vendor selection. 6

7 2 How will this impact my overall RTB revenue? This is both the most important question for publishers and the hardest to predict. There are two key factors to consider when examining the projected change in revenue. Incremental Demand The key draw for many publishers considering s2s is the ability to add additional demand partners without negatively impacting latency. This particular selling point is often overstated and heavily nuanced. While you can run many exchanges s2s, it s important to understand how much additional value you will actually be adding with each partner. A more impactful goal for s2s is the amount of premium incremental demand that can be added without negatively impacting latency. For each additional exchange to add incremental value, there has to be a substantial amount of unique demand, priced to compete with direct sales, and technologically able to respond to the demands of an ever decreasing timeout. Today there are currently a handful of exchanges that match this description, and running partners outside of this criteria may bring unnecessary exposure to poor quality ads, over exposure of requests to DSPs, and ultimately the potential for gaming. 7

8 Figure 3 Exchange A Result: Low Latency Connection 1 3 Exchange B Result: Low Latency Connection 2 3 Exchange C Result: Low Latency Connection 1 2 Server Side Wrapper Users 1, Wrapper Client KEY Client Side Call Server Side Call Server side connections provide speed and reliability, but lack direct access to users Identifying Users User sync (aka cookie sync, cookie matching, or user matching) is the ability to recognize a user, allowing platforms (i.e. DSPs) to ascribe value to that impression. This is specific exclusively to desktop and mobile web environments, not app where user syncing is replaced with device identifiers. 8

9 In a client side integration, cookie matching is a straightforward process with a direct line of communication between each exchange and the user s browser. In an s2s integration, only the wrapper has a touchpoint with the user s browser. As such, a 3rd party exchange participating in the wrapper relies on the wrapper having conducted a match of its user data, since it must first perform a match with the wrapper before it can perform a DSP match. Without user data, impressions have diminished value to buyers, therefore any decrease in user sync rate can have a significant negative impact on revenue Figure 4 Exchange A Result: Full User Match Exchange B Result: Full User Match Exchange C Results: Unknown The number of exchange partners integrated client side must be limited due to latency impact Wrapper Client KEY Client Side Call Server Side Call Client side connections have better user matching, but are slower and less reliable Client side connections have better user matching, but are slower and less reliable 9

10 3 How will this impact transparency and fairness? As publishers know all too well, transparency is key for creating a fair auction that ensures impressions go to the highest bidder and surprise fees aren t shifting dollars from the publishers pockets to middle men buried in the supply chain. Bringing the wrapper server side innately introduces new risks to transparency, which must be closely monitored. When the wrapper resides in the browser, every part of the process is available for inspection. This is not the case for the server side integration. The Index wrapper re-introduced transparency by providing robust reporting and log level data to both publisher and 3rd party exchanges. Fairness is further cemented by creating an A/B testing framework between client side connections (fully transparent) and server side (less transparent) connections, putting control and choice squarely into the hands of the publisher. 10

11 Figure 5 Exchange A Result: Full User Match Exchange B Result: Low Latency Connection Exchange C Result: Low Latency Connection Wrapper Client Server Side Wrapper 1 2 KEY Client Side Call Server Side Call The IX wrapper gives publishers a choice of how to set up their wrapper to ensure the best balance of user experience and revenue, and the tools to make a data driven decisions Pricing Transparency Make sure you are aware of any charges for 3rd party exchanges for participation in their s2s offering. This can correspond to a reduction in participation and a decrease in working media. 11

12 Index Exchange has not charged fees for its client side wrapper, and will not be charging fees for its server side wrapper. We believe exchanges should only be compensated when they source and provide the highest net bid for publishers, thereby increasing publisher revenue. Auction Dynamic Transparency The move server side also introduces mediation for most wrapper offerings. A mediated wrapper runs an additional auction amongst wrapper participants and passes a single winning price to the ad server (or a second in the event of deal based bid handling), rather than passing a price for every single exchange. This is desirable to publishers for the increase in scalability gained by streamlining line items in their ad server. With auction dynamics being managed across all 3rd party exchanges by the wrapper provider, it s important to learn about those dynamics and ensure this aligns with the goals of both publisher and buyer. Be on the lookout for a lack of disclosure and built-in advantages for the operator of the wrapper that might deter buyers. If the wrapper provider also has a buy-side business, it s a strong hint to look closer and get everything in writing. The Index wrapper offers full transparency to both publishers and partners alike on pricing and auction dynamics. There are no advantages built into the Index bidder and we aim only for a flat, fair auction driving the best price for publishers, regardless of the source. The auction dynamics of the server side integration are the same as the client side integration, continuing the level playing field for all participants for which the Index is known. 12

13 4 Do I have to move all of my partners to s2s at once? No. The quick rise in popularity of s2s header bidding has thrown the industry into flux, and it may take time for every exchange to catch up in the technology and trust required for an effective s2s bidder integration. In the meantime, publishers should have the option to begin testing with exchanges as they do become ready. An either/ or approach will be unnecessarily limiting to publishers who want to begin testing and learning now. Most importantly, publishers should ensure that they can make data-driven decisions about where each partner performs best in terms of user experience and revenue before shifting everything server side. 13

14 5 What should I look for in a s2s provider? Choice: Support for server side and client side connections, by partner Transparency: Clear auction dynamics and fee structures for publishers, partners, and buyers Tested: A/B testing capabilities to show the impact to speed and revenue by partner based on integration type Service: White glove service to take on the heavy lifting of implementation and upgrades Technology: Reliable technology, robust infrastructure, and broad global data center distribution with strategic co-location Fair: Free of fees and conflicting interests 14

15 Conclusion While it can be easy to get caught up in the potential user experience upsides of s2s, there are clearly many variables to take into consideration as the market evolves. To respond to this, Index has kept our focus on putting the choice into the hands of publishers by offering both client side or server side integrations, by partner, within the same wrapper. Publishers will have direct control over critical aspects of their server side wrapper auction, including the partners involved, timeout thresholds, and deal handling to ensure they have the tools to make the right decisions for their business. About Index Exchange Index Exchange is an advertising marketplace where premium digital media companies can sell their ad impressions transparently, in real time, to programmatic buyers. Built on the pillars of neutrality, openness, and the most reliable technology, we aspire to be the ad exchange that media companies can trust. Because we are independent, with no other business interests, the top technology companies in the industry choose to partner with us and together, we build better solutions with media companies in mind. And we re independent by choice, because that lets us make decisions for the long-term benefit of our clients, not the immediate demands of investors, or for short term profits. We believe greater competition leads to better yield for media companies and better inventory access for marketers. 15