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on september 9th, us time, google will most likely face a new round of severe tests - in a district federal court in alexandria, virginia, presided over by judge leonie brinkema, a case will be launched against google for alleged illegal monopolistic behavior in the operation and maintenance of the digital advertising market.

judging from the current information, the case has caused quite a stir since the end of august, especially after hundreds of statements, emails, testimonies and other documents were unsealed, and discussions on the case on the internet have intensified. although a large number of relevant documents have been analyzed by various overseas media, there is still a lot of evidence that remains confidential.

but it is undeniable that even if we only look at the existing information, we can find that google is quite resistant to the header bidding model that emerged in previous years, and has developed many professional tools to offset header bidding and play its due role.

01 why is google so disgusted with header bidding?

to address this issue,we must first explain a key point: what exactly is header bidding?after answering this key question, we can further look at why google is so opposed to this model.

in fact, most media platforms have always faced a similar problem:how to sell your own advertising inventory at a higher pricehowever, before the header bidding model was actually applied, most media platforms would choose to connect with multiple ad networks at the same time to ensure that the ad inventory could be sold smoothly. however, this also brought a problem. after all, one ad inventory cannot be sold to multiple media at the same time. therefore, the media platform naturally needs a corresponding inquiry process to ensure that a single ad inventory can be sold one-to-one to the corresponding demand party.

thus, the earliest inquiry process: waterfall flow was born. the waterfall flow does not set a priority bidding order between different ad networks, so in most cases it will make requests from top to bottom according to the weight, for example, it will prioritize ad networks with higher average ecpm every time. at the same time, the waterfall flow can also maximize the ad fill rate, because according to the process, if the ad platform with higher weight cannot fill the ad, it can be transmitted downward to the ad flow with lower weight to obtain the fill.

but it is undeniable that the waterfall flow is not perfect. on the one hand, if you want to get a higher ad fill rate, you must add more ad networks, but as the number of levels increases, additional delays will inevitably increase, which will make the possibility of ad return failure higher.

on the other hand, since ecpm is usually not fixed, after all, the ecpm of most advertising networks is dynamically set, waterfall flow generally chooses to use the historical average ecpm value to determine the weight of the advertising platform. however, the actual ecpm of each delivery is likely to fluctuate greatly.

we can use a more extreme case to explain this situation.for example, there may be a huge price difference between an advertisement for a private jet and an advertisement for a mass consumer product when facing different groups of people. when a person labeled as a wealthy person enters the media, the media immediately sends a request to the advertising network. the advertiser of the private jet will obviously be willing to make a higher bid for the opportunity to show the ad to him. in contrast, the bid for mass consumer products will not fluctuate.

however, wealthy people are a minority after all, which means that if we look at the average ecpm, the average ecpm of private jet advertising will obviously not be higher than that of mass consumer goods. this also makes its advertising weight in the waterfall flow relatively low, causing the advertising revenue of the media platform to decline.

to solve this problem, header bidding technology came into being. of course, when it was first born, this technology had different names: header bidding, pre-bidding, early bidding, overall revenue management and tag-free integration (although it requires tags).

different from waterfall flow, developers use header bidding to provide advertising resources to different ad networks at the same time, allowing indiscriminate real-time bidding, ensuring that the highest bidder wins each time, thereby increasing developers' revenue. this concept was first introduced to media platforms in 2015 and then became a universal technology in 2019.

02 “first look” and “last look”

the “killer trick” for header bidding

it is precisely because of the application of header bidding technology that digital advertising has become more transparent and fair.but this is obviously not good news for large advertising networks, especially for giants like google. as google has been listed as one of the advertising networks with the highest waterfall weight in most cases in the past, the emergence of the header bidding model means that google will compete with other advertising networks on the same level, thereby losing the low-cost advantage brought by high weight.

this is also true in reality. since the header bidding technology first appeared in 2015, google has immediately begun testing a product called dfp first look, which allows media platforms to reserve a portion of the advertising inventory before putting it online on the advertising server, based on the early access rights of certain preferred sellers.

although google claimed at the time that this technology was more conducive to increasing the advertising revenue of media platforms and improving the bid winning rate of open platforms, the internal documents of google that were exposed this time show that this technology is obviously more beneficial to google. for example, a ppt file titled "why priority viewing is important" from a speech on dfp in april 2015 mentioned:prioritize viewing to allow permission holders to access the most valuable cookies, thereby obtaining the most valuable ad slots in advance. without this technology, we can only obtain inventory that has been abandoned after being viewed by other buyers.”

although the direction of this statement is not too clear, many witnesses who are preparing to attend the trial chose to interpret it as: "if there is no dfp priority bidding, then under the influence of header bidding technology, with the current bid of google's ad network, i am afraid that it can only obtain those ad inventories with low value."

of course, some overseas media believe that this statement may only explain what advantages dfp can bring to their customers by giving priority to viewing, such as obtaining those high-value ad spaces in advance. but no matter which interpretation it is, from now on, dfp does give google some additional advantages in the bidding advertising system.

as time goes by, google's determination to weaken header bidding does not seem to have declined with the passage of time. on the contrary, in 2016, google began testing a transaction bidding tool called open bidding (ob), which was called dynamic allocation in the early years. it allows demand parties to complete bidding directly on adx according to their own needs.

by 2018, google described the open bidding model as a more media-friendly and enhanced version of header bidding technology, but the us department of justice believed that this was a new way for google to win advertising space by damaging competitors' trading networks.

not to mention, due to the characteristics of google adx's second-price auction and google's advantage of last view, google can still maintain a huge advantage even after abandoning the dfp priority view technology. in fact, as early as 2018, a large number of overseas media have questioned google's second-price auction and last view.

but it was not until 2019, as most advertising platforms began to switch to first-price auctions, that google abandoned last-viewed and second-price auctions and switched to first-price auctions. apparently, google also knew exactly what it was giving up. in a previously undisclosed document in the evidence and marked as "privileged and confidential (do not share)", google explicitly admitted that since google switched to first-price auctions in 2019 and gave up the last-viewed advantage in adx, google's display advertising lost 21%, dv360 lost 9%, and a total loss of about 14%.

03 upr, google’s new killer feature

but it is quite contradictory, or google may have already responded. while switching to the first-price auction, google launched a new feature called uniform reserve price rule (upr) to automatically optimize the reserve price in google ad manager.

along with the merchants who have adopted this feature, the transaction expenditures of many other third-party advertising platforms have all declined. according to the indictment of the us department of justice, google’s shift to first-price auctions may be just a cover to introduce these "more controversial changes," including the elimination of the upr feature of differentiated low-price settings.

of course, after the launch of upr, google stated in public that this change is beneficial to media platforms and will simplify the process of programmatic buying, which means less server pressure and faster advertising response speed. however, the us department of justice stated thatgoogle has long admitted that the switch to first-price auctions is intended to promote the interface for implementing upr, thereby preventing media platforms from giving priority to bids from other advertising trading platforms.

as a result, other trading platforms, including rubicon, which provided some evidence this time, soon felt the pressure. specifically, in an email in august 2019, lindsay (adishian) pursell, then the authorized buyer (ab) account manager, observed that "since the implementation of the first price/upr, spending has declined in rubicon and the broader exchange bidding (eb) community."

subsequently, barbara piermont, the company's head of industry and ad platform bidding, sent another email to google and asked if google could give rubicon some suggestions for improvement.

when google employees emailed the relevant person in charge to ask how to respond to rubicon,art price, head of google analytics, wrote in an email that the “team should meet to discuss how we want to verbally communicate this information to rubicon.”

in the original email, the word "oral" was added in brackets. the us justice department believes that this is obviously to emphasize to google employees internally that no written evidence should be left for this information, or that if this information is communicated in writing, it will bring additional risks.

similarly, shortly after art responded to the email, haskell garon, then senior product manager for the sell-side platform, issued a warning: “as a reminder, any information about share transfers between open auctions/authorized buyers is extremely sensitive and should not be shared externally (and should be handled with caution internally). if there are questions about how to convey this information to rubicon or other buy-side customers, please discuss it in the communication.”

04 conclusion

in fact, it is difficult for us to say whether google has gained a lot of extra benefits in this series of situations, but from the perspective of these evidences, google has clearly shown great hostility to header bidding technology. at the same time, according to appsflyers' related report "appsflyer advertising platform ranking", at least from 2019 to 2020, google and facebook have always maintained their positions at the head of the matthew effect, existing as double-headed eagles, until the advent of the att framework and the era of large-scale mergers and acquisitions of third-party advertising platforms, and then some changes gradually occurred.

but no matter what the situation is, for google now, how to explain these issues to judge brinkema during the trial that begins on september 9 is the moment when the truth or facts come to light.