Uh-oh, Google, Amazon is dominating server-to-server bidding

Agencies are slowly getting to grips with Amazon's ads.

Header bidding grew out of publishers’ desire to break the stranglehold Google has on programmatic advertising. Now, Google rival Amazon has established a leading position with the presumed successor to header bidding, server-side bidding.

Amazon’s Transparent Ad Marketplace is the most popular server-to-server wrapper in the ad industry, according to a study that ServerBid released on Oct. 4. Publishers are adopting this product because it brings in unique demand, is easy to integrate, matches users across different platforms and provides competition to Google, which already wields a lot of control over publishers and their tech stacks. While much of ad tech plumbing is interchangeable, Amazon has something new to bring to the party: proprietary commerce and behavioral data.

Since Amazon’s ad marketplace has unique demand, its wrapper is an attractive option for publishers trying to boost their programmatic CPMs, said Erik Requidan, vp of sales and programmatic strategy at Intermarkets.

Another benefit of Amazon’s wrapper is that it’s easy for publishers to set up and make adjustments to, said Emry Downinghall, vp of advertising at Chegg. For example, the wrapper lets publishers easily add or drop supply-side platforms. It also makes it easy for publishers to shift bidders between on-page and server-side.

A downside of server-to-server connections is that it is tougher for the SSPs and demand-side platforms to match their user IDs. With on-page header bidding, each SSP has access to the user’s browser, which means they gather and use their own matching data to sync with the DSP’s matching data.

But with server-to-server wrappers — where one vendor aggregates the bids from all the other vendors in a cloud-based product — only the vendor collecting the bids has access to the user’s browser, which means the other vendors have to sync their data to the aggregator’s data. This additional step can reduce match rates, and it is one reason why publishers are hesitant to adopt server-side bidding.

Unlike other tech vendors that have to make inferences from third-party data in order to build a large user database, Amazon continually obtains data directly from millions of people who use its various products. Because Amazon gathers lots of information on a large pool of users, it can avoid one of the pitfalls of server-side bidding by successfully matching user data across the various vendors in its wrapper, said Chip Schenck, vp of data and programmatic at Meredith Corporation.

The popularity of Amazon’s wrapper is just the latest example of the company sinking its hooks into the ad industry. Amazon is also growing its sales team, opening up self-service programmatic ad products, courting video publishers, getting frequently mentioned during quarterly earnings calls and hiring 2,000 people to work in its new office in New York City. Amazon declined an interview request for this story.

Given that the rise of header bidding was prompted by publishers’ frustrations about how Google’s ad server favored its own exchange, it isn’t surprising that some publishers want to hedge against the search giant’s dominance.

One of the reasons why publishers are adopting Amazon’s server-side wrapper is because they see it as a counterweight to Google, said Purch CTO John Potter.

“It’s a pretty straightforward concern of everyone from publishers to SSPs,” he said. “Nobody wants Google to have more power in advertising.”

But if there is anyone that can overtake Amazon in server-side bidding, it’s Google. Google’s server-side product, which it calls exchange bidding, is still in pilot, but the number of publishers using it has grown from 100 to 185 since May, according to a Google spokesperson. Google’s exchange bidding will become available in early 2018 to all publishers that use Google’s ad server DoubleClick for Publishers, the spokesperson said.

It’s worth recognizing that server-to-server bidding is still in its infancy. Amazon was an early adopter of this technology, but its wrapper isn’t even a year old.

Schenck said Amazon’s high adoption rate early on “gives them a little bit of a head start, but it doesn’t determine who wins the server-to-server war.”


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