11.02.16

The Disruption Caused by Header Bidding Shines a Light on Social

Although header bidding isn’t new, the battle between third-party ad exchanges, and ad-tech providers came to a head in early August as the technology became more frequent. As the display world enters another civil war, the controlled waters of social will look more appealing than ever.

Programmatic auctions run like a waterfall, giving the highest-tiered ad exchanges first pick at premium ad inventory. Header bidding is different in that it allows ad exchanges to bid simultaneously by implementing a piece of code, thus creating more competition and allowing publishers to realize a higher value for their ad inventory.

As bullish as many are about the potential changing of the guard represented by the header bidding movement, the problem for advertisers trying to invest in long-term digital strategies isn’t waterfall auctions or header bidding. The problem is the frequent disruption in the digital industry—header bidding is just the latest offender. While the constant arms race appears to create new efficiencies, in reality, it’s dragging down the ecosystem as a whole.

The Wrong Kind of Disruption is Bad for the Ecosystem

War can be good for participating economies, but civil war is almost always bad for the economy of the single warring nation.

Sure, the free market of digital display has indeed led to improved efficiency and driven up value for some advertisers and publishers, but the lack of stability has led to headaches and wasted ad dollars for all parties investing in digital display. Add to that the evolution of header bidding that’s causing the highly commoditized market to become riddled with even more rivalry and instability, and advertisers are becoming focused on just keeping up with the change, instead of the task at hand—namely, the day-to-day work of marketing.

The Stability of Social Dazzles as Civil War Rages On

Display’s reign over digital advertising could be waning as publishers and advertisers shift their dollars to the steadier waters of social.

Opponents of social advertising will always quickly denounce its “walled garden” ecosystems, saying it’s “too closed to be fair,” but what they fail to mention is that whatever social lacks in openness, it makes up for in control and stability.

For one, the digital display world primarily uses cookies to target audiences. While they had their heyday, social offers far more effective ways. Instead of throwing ads at a handful of websites and hoping they stick, social allows you to place ads exactly where your target audience is—across devices and placement types, and on the platforms where people are spending 28% of their internet time.

More importantly, Facebook’s advertising capabilities have been growing linearly for years in direct pursuit of business value for advertisers. There’s none of the stopping and starting that now seems so common in digital display.

Facebook’s Entry Into Header Bidding Could Stabilize the Ecosystem

In an interesting twist, Facebook has ventured into header bidding in what appears to be an attempt to disrupt Google’s control over programmatic ad dollars. The move offers Facebook advertisers and publishers access to the display ecosystem via its Audience Network. Widespread adoption could increase demand for placement and yields for publishers. It could also cut out intermediaries, giving millions of advertisers and publishers access to one another with plenty of room for improved cost efficiency. For Facebook, this means another expansion of its Audience Network into the web beyond its traditional, walled ecosystem. For social advertisers, it means a single-point provider to power at-scale campaigns across a multi-touch landscape, as they can serve their campaigns across the open web while still tapping Facebook to receive ads purchased through its sophisticated data and targeting capabilities.

If things go as planned, advertisers overtired from nights worrying about winning the digital display race may soon find themselves back in the business of advertising—all thanks to social.

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The disruption in display has spurred a nearly constant effort to evaluate, invest in, and adopt the latest technology. The focus has shifted from achieving marketing goals to “keeping up with display.” As long as the civil war over display rages on, the stability of social will look more appealing to many digital advertisers.

Here’s a call to the advertisers funding the civil war in display: Get out of the business of war. The peacetime waters of social are just fine, and the economy is ready for expansion.
 

Does Facebook’s role in header bidding interest you? Download our ebook to learn more:
The Facebook Advertising Ecosystem

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