What does Facebook’s header bidding play mean for the ad industry?

The social networking behemoth's new offering will position it as a competitor to Google in the programmatic department, but will it push for more transparency?

Facebook has entered into the world of programmatic header bidding. The social platform announced on March 22 that it will soon open up its Facebook Audience Network (which allows developers and publishers to monetize their apps with Facebook ads) to header bidding platforms.

Header bidding is a way for publishers to conduct direct auctions on their advertising units, potentially generating more value for unsold inventory.

Traditionally, publishers’ unsold inventory is sold to the top-ranked ad exchange and, if it remains unsold, then moves to the second-highest-ranked exchange and so forth. The sequence is known in the programmatic world as a “waterfall” sequence. Header bidding, also known as pre-bidding, is a piece of Javascript that allows advertisers to compete for publishers’ inventory in an auction process that takes place outside of a traditional ad server.

When header bidding is introduced, said Drew Bradstock, SVP of product at Index Exchange, it creates a more competitive landscape and brings publishers more value for their ads. “By getting into header bidding, Facebook’s willing to see the true value of an ad impression — that means all the exchanges have to beat the real-time price Facebook is willing to pay. Google has to beat it, we [Index Exchange] have to beat it, Rubicon has to beat it. It pushes up the revenue the publisher is going to get, and it pushes everyone to be better.”

It’s safe to say that Bradstock and Index Exchange are among those that think Facebook’s move will be a game-changer in the programmatic industry. The company isn’t alone — AdAge declared that Facebook “changed the mobile landscape,” while Business Insider called the move “an unprecedented attack on Google.”

And with Facebook up against criticism for its “walled garden” nature and a lack of transparency around advertising metrics, Bradstock said it would likely push Facebook toward more independent verification.

But Brad Cressman, managing director at AOL Canada, said that while it’s great that Facebook is entering into the world of header bidding, it is not necessarily a game-changer.

“Header bidding is one way to improve transparency and allow publishers to realize the value of their impressions, but many other methods exist and the space is constantly evolving,” he told MiC.

But he did agree that the move would likely push Facebook to a more transparent place. “Facebook is, at it’s core, a walled garden. But as they evolve their network, they likely realized that publishers demand greater transparency,” he said. “We’ve been in this game for over 15 years and fully understand the transparency and optimization efforts that publishers demand, especially as we are one as well.”


Photo by: Alexey Boldin: Shutterstock