IX Perspectives

The Drum: L’annonce de Google au passage au first-price auction est un premier pas vers la transparence absolue

Real progress generally takes time to establish itself regardless of the sector. While innovations are developing at an alarming rate, especially in the area of ​​new technologies, global change in the sector is a slow and steady process. Initially, improvements are mostly implemented on a smaller scale. By ricochet effect, a simple initiative ends up transforming a whole system. The major innovations come from agile, independent companies eager to change standards. As a result, the major players end up adopting these practices and taking them for reference.

In the programmatic advertising sector, few recent examples illustrate this phenomenon better than Google’s adoption of the first-price auction. If this universe is foreign to you, do not be afraid: here are some explanations.

In the field of digital advertising and real-time bidding, “first-price auctions” refer to a model in which the buyer who wins the advertising impression pays for it at the exact price of his bid. Conversely, “second-price auctions” correspond to a model in which the buyer pays $ 0.01 more than the second highest bid for an impression. These definitions are essentially theoretical, because in practice, ad exchanges never worked completely at the second price. Each customized the format, incorporating variants that could be both insignificant and malicious. I let you imagine the overflows with the floors prices and the hidden fees for the buyers.

Pendant des années, les variantes des second-price auctions ont prédominé dans le secteur et se sont imposées comme la norme, en débit de leur manque de transparence et de leurs contraintes  entrainant une baisse des revenus. Le seul moyen de réaliser une enchère unifiée véritablement équitable consistait à adopter le format de first-price auctions, ce que les ad exchanges indépendants (dont Index Exchange fait partie) ont commencé à faire il y a quelques années. Lentement mais sûrement, cette stratégie a jeté les bases d’un marché plus équitable, dopant les win rates  des acheteurs et augmentant par là-même les opportunités de revenus des éditeurs.

Last week, Google announced that its ad exchange, Adx, was poised to adopt the first-price auction format. Competitive publishers, buyers and ad exchanges immediately welcomed this decision, which perfectly illustrates the ad’s ability independent exchanges to impose a course.

For the second time, smaller independent companies were able to influence the industry, the first time corresponding to the launch of the header bidding. At the time, programmatic actors had no reason to welcome this change with enthusiasm, as the particularly lucrative model that resulted was easier for very large companies to access. Smaller and more agile groups had many hurdles to make to make the transition. In spite of all this, the header bidding ended up cleansing and balancing the market, and this innovation would never have been possible without the independent actors’ approach and their sense of innovation.

Nevertheless, many difficulties remain to be overcome. While the use of header bidding and the adoption of first-price auctions have proved to be decisive initiatives to increase the visibility of the supply chain and improve the equity and visibility within the ecosystem, they remain nonetheless at the core. stage of isolated actions. In the months and years to come, it is up to us, as independent players, to raise the level of transparency and accountability to begin the era of great change. In my opinion, the next step will be to unravel our business processes and reveal to our partners and competitors the way our technology works.

In view of the efforts required to innovate, engineers are naturally reluctant to communicate the details of the iterations of their latest finds. Nevertheless, I am convinced that the era of innovation, responsibility and transparency can only be initiated under this condition, and that is what Index Exchange is striving to do.

For some time now, the word transparency is on all the mouths in the sector. While many vendors and technology platforms say they are fully open and transparent, many others would be wise to walk the talk. In fact, a company can not criticize walled gardens or declare that transparency and accountability are top priorities, if its own ecosystem is not completely open. Terminology, processes and transactions must never be ambiguous.

Real progress is slow and accountability will be the result of a collective effort. We are only at the beginning of this adventure.

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