In New Sell-Side Push, Facebook Trials Header Bidding And Tie-Ins With Native SSPs
August 25, 2016 - Originally published by
Facebook just showed up to the header bidding party.
Facebook confirmed it’s “exploring header bidding with a small set of publishers.” Those partners may include USA Today and Hearst, according to The Information, which was first to report the news.
For Facebook, the move could mark a significant expansion of its Audience Network platform, expanding the ad network's access to Facebook and Instagram users across mobile and desktop. For its publishers, the move will mean another source of demand likely to boost yield. And for rivals like Amazon, Criteo and Google, it will mean more competition for high-value publisher ad space.
Separately, AdExchanger has learned Facebook is testing another way to quickly scale up native supply for Audience Network. It’s building connections to the mediation layers of native advertising SSPs and ad servers. That cohort includes TripleLift, Sharethrough and Nativo. Connecting to these native platforms gives Audience Network access to native ad templates, its preferred creative format, along with thousands of publisher connections.
By contrast, Facebook’s header bidding placement strategy will be geared to both native placements and standard IAB units. Facebook prefers native because it performs better, but it knows it needs banners to achieve scale in Audience Network.
The two sell-side initiatives show Facebook is increasingly focused on building out a publisher network, an area from which it had seemed to shrink from last year after the shuttering of LiveRail. And that renewed focus speaks to a key challenge the company faces this year: It needs more supply, stat.
Facebook will run out of room to show ads on its sites next year, as it warned investors on its Q2 earnings call. To continue growing, it needs to put more juice into Audience Network, which reported a $1 billion revenue run rate last Q4.
So why is Facebook specifically targeting the header rather than buying through exchanges? While Facebook could connect instantly to millions of websites through SSPs and exchanges, the header bidding approach cuts out middlemen and tech fees while ensuring broad access to supply.
“If you are a DSP, you really need SSPs to exist. But if you are an advertiser, you don’t need SSPs to exist. You just need publishers to exist,” said Chris Kane, founder of programmatic consultancy Jounce Media.
Facebook's header bidding approach calls to mind that of Criteo, which pioneered an early version of header bidding and used its "first look" access to publisher inventory to cherry pick impressions for its RTB customers before they appeared on open exchanges. As Criteo learned, signing on publishers via header bidding solves a big technical problem for a buyer looking for specific users or data signals.
And publishers loved Criteo's differentiated demand – mostly ecommerce companies seeking to retarget their shopping cart abandoners. Amazon copied that strategy for its A9 business.
In Facebook's case, its differentiated demand is a little different: mobile app-install marketers and, increasingly, brand advertisers and small businesses. Similarly, many publishers prize Google Ad Exchange demand because it includes AdWords, a network of search advertisers and small businesses that buy only through Google.
Additionally, publishers working with Facebook can probably rest assured that the inventory will be safe and in attractive formats like native and video, according to Chris Reid, founder of publisher-focused tech startup Sortable.
Facebook offers “a massive pool of differentiated demand … thus avoiding all the pitfalls of malvertising and mobile redirects,” Reid noted.
But SSPs had better watch out. Facebook partners have a way of becoming road kill.
“Long-term, publishers will be disintermediated because they don’t have a direct relationship with the client and their audience is a commodity,” said Mike Caprio, programmatic GM at Sizmek. “As far as Facebook is concerned, it’s just eyeballs.”