ad bid index tech said caching exchange

Ad tech’s bid-caching controversy, explainedFor the past week, the programmatic world has had daggers drawn over “bidcaching,” a technique used by Index Exchange to extend the life of bids inprogrammatic ad auctions. Reactions have been split on the method, which IndexExchange has painted as an innovation, and others have panned as the type ofopaque skulduggery that ad tech is looking to rid itself of. Index has coppedto the “smart innovation” in a measured mea culpa to clients and halted theuse of bid caching.The method Bid caching happens when a lost bid from one auction is used to fill asubsequent auction — but without the buyer knowing, and with slightlydifferent ad targeting information. For example, if a demand-side platformbids for a specific impression on a publisher’s homepage to appear at acertain time, and it loses the bid, the exchange will roll the bid intoanother auction where the impression characteristics don’t quite match up. Soinstead of bidding on a homepage, the buyer could end up with the ad appearingon an article page. The risk: The buyer might not get what it thought it waspaying for.“Bid caching is fundamentally wrong,” said Dan Wilson, CEO of London MediaExchange. “You’re paying for something else. It’s like going to supermarketand getting beans, and at checkout, they swap it out for something else.”The case for bid caching The core argument for the use of bid caching has been that it helps publishersgenerate revenue from latency-heavy environments, such as mobile apps. Forthat reason, some publishers have been sympathetic to the latencyjustification made by Index Exchange.“Watching their revenue and CPM since Sunday, there has been no majorfluctuation to Index, so I don’t think it gave them as much of an advantage asmight have been thought,” said a newspaper publishing executive. “I wouldagree with their statement that this may become the norm as publishers focuson page speed.”The buyer view Many, particularly rivals coincidentally enough, have piled on Index Exchangefor the practice. The focus on transparency has likely added fuel to the fire.The fact that Index revealed that the method was reportedly used on 50 percentof its impressions, was another shock for buyers.“I was surprised that this whole practice was happening,” said Stefan Havik,md of Dentsu Aegis-owned M1 and Amnet. “I had never heard of bid cachingbefore this. It is murky at best. From a buyer perspective it means you’regetting stuff you haven’t been bidding on.”Beyond transparency concerns, some buyers fear the practice can screw up theirstrategies when it comes to everything from frequency capping to brand safety.For instance, there’s no guarantee that these ads aren’t being held and servedinto less reputable publisher sites, although the risk is relatively small.Also, there is no way of knowing for sure if that user who has been served thead of the original lost bid hadn’t just received the same ad from a differentauction.“Index Exchange maintains bid caching is a reasonable solution to monetizationin areas where high latency is a challenge, mobile being one such example,”said Simon Harris, head of programmatic activation at Dentsu Aegis’ mediainvestment arm Amplifi. “While latency is a challenge in this environment, wefeel this solution falls short of the market’s requirements for transparencyand welcome Index Exchange pausing this feature. There is a need for moreformal governance in this area on acceptable practices and agencies. Ad techvendors and governing bodies all have a role to play in creating thesestandards.”Playing to a narrative Let’s face it: Ad tech has something of a trust problem. The convolutedprogrammatic ad system is hard to understand, and that complexity has givencover to several instances of corner-cutting. Bid caching, especially as itwas implemented without a peep by Index, fits the story that ad tech providersare often pulling fast ones on unsuspecting buyers and sellers. “In that [ad tech] space where micro-seconds matter, everyone is trying to getan advantage,” said a publishing executive who spoke on condition ofanonymity. “You might call it gaming the system, or you might call it ‘smartinnovation.’ It’s more disappointing how they went about it and systemic of adtech’s approach on both sides of the supply chain around transparency ofpricing and techniques. For many in the industry, the issue comes back to theimportance of ad tech vendors disclosing their practices with publishers andadvertisers. ”The Index Exchange development is another sign of how disintermediatedpublishers and marketers have become from the decision making,” said DannySpears, programmatic director at Guardian News & Media. “It’s the machinesthat now decide how ad spend is distributed across the web and at what price.They’re essentially deciding how a publisher [and marketer] supply chain workswhile their response to the outcry feels disingenuous.”The outlook Like any good ad tech controversy, this one is likely to blow over. Peoplewill argue whether Index got its fingers caught in the cookie jar, but thecompany has a good reputation in the broader industry and will be given creditfor reacting fast to the issue and halting the practice.Buyers who spoke to Digiday on condition of anonymity said they weren’t likelyto massively change their processes as a result. Any attempt to strictlymonitor this in future, would incur large technical costs. Some believe thatto progress and grow ad tech has to make these blunders, and the industry willwork to retrospectively build in best-practice guidelines.“Disclosure is the key here,” said an ad tech exec who spoke on condition ofanonymity. “I would not be surprised if bid caching is a feature offered byall in 12 months as a option.”https://digiday.com/?p=299865