Header bidding gives Facebook another opportunity to chink away at Google's monopoly of the online display ad market
It looks as though Facebook's latest attempt to challenge Google in the online display ad market will be to get on board with the newest trend in ad tech — header bidding — according to The Information's Cory Weinberg.
A Facebook spokesperson told The Information the tests were in an "early" stage. USA Today Sports Media Group general manager Chris Pirrone confirmed the publisher was working with Facebook's Audience Network to implement the technology.
Header bidding is one of the ad tech industry's big challenges to Google DoubleClick's monopoly.
The technology essentially lets Google's rivals jump to the front of the line in the contest for ad slots. It can help publishers get the best price for their ad inventory because header bidding technology allows multiple exchanges to compete with each other — and a publisher's in-house sales team — driving up ad rates.
Before header bidding, many publishers used a tool within DoubleClick called "Dynamic Allocation," which allowed Google's ad exchange, AdX, to compete with their in-house sales teams.
The problem for the ad tech community is that they have to wait until after AdX had a look-in before they can compete for these ad slots. That greatly reduces their chances of winning in the auction that takes place for ad space in the time a user loads up a web page.
Ad tech companies created a hacky workaround — header bidding — which asks publishers to insert a piece of code in the header of their webpages, which sends out the ad request before AdX takes a look. Header bidding has proved hugely popular. A report from BI Intelligence published earlier this year suggested almost 70% of publishers have adopted header bidding technology, compared to almost zero two years ago. It has lessened many publishers' reliance on Google by anywhere between 10% up to 70%, sources told Business Insider earlier this year.
Now Facebook wants in on that game in order to expand its Audience Network, which lets brands extend their Facebook ad campaigns to the rest of the web. Facebook said the Audience Network generated $1 billion in sales last year.
Facebook is testing header bidding implementation across mobile and video ads, according to The Information. The news comes three months after Facebook shut down LiveRail, the video ad exchange it acquired for a reported $400 million to $500 million, due to ad fraud, viewability, and integration issues.
AdAge reports Facebook is likely to launch its header bidding solution in September or October this year.
A source familiar with Facebook's plans told AdAge: "Google is frankly very defensive because their position is being threatened. If you now amplify that by Facebook saying, 'Hey, wait a second, look, there's a chink in the armor. All these independent companies have found it, why don't we do the same thing and bring our wallet to bear?' We're actually going to start to see an event that could at a very, very substantial level check the Google monopoly."
In April, Google announced it was testing a product that many people saw as its answer to the growth of header bidding. Exchange Bidding in Dynamic Allocation (EBDA) allows third-party ad exchanges to compete with AdX within its Dynamic Allocation product.
However, as Business Insider reported earlier this month, many people within the ad tech and publishing industry think EBDA has a long way to go before it convinces anybody it benefits anyone except Google. Most of the sources we spoke to said a penned Q3 launch is likely to be delayed as a result.