Facebook Seizes Header Bidding to Challenge Google in Programmatic Ad Sales

Plans to Use a Spreading Tech as a Shortcut to Big Publishers

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Facebook may have found a way to connect its advertisers with more publishers without going through Google's DoubleClick or Adx.
Facebook may have found a way to connect its advertisers with more publishers without going through Google's DoubleClick or Adx. Credit: Facebook
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A digital advertising battle royale is taking shape, as Facebook appears to be moving forward with plans to compete against Google for programmatic ad dollars that have historically been dominated by the search giant.

Facebook has a simple strategy: bring advertiser demand from the Facebook Audience Network to the world's largest publishers by integrating itself within a header bidding wrapper, a fairly new technology that lets Google's competitors cut to the front of the line and bid on ad inventory.

As it stands right now, Index Exchange and AppNexus are among the leaders in header bidding wrapper technology. AOL has a wrapper, too, but isn't as far along as the other two exchanges. They are all working with the world's biggest publishers. And when Facebook integrates its header bidder within their wrappers, those publishers will have access to its Audience Network.

It's effectively a shortcut for Facebook to bring its demand to publishers while taking on Google at the same time.

The Information first reported on Wednesday afternoon that Facebook was moving to expand the reach of its audience network through header bidding. A Facebook representative declined to comment. (UPDATE: In a statement Thursday morning, a Facebook spokeswoman confirmed that it is testing a header bidding approach. "We are constantly testing new tools and products to help publishers find value and grow their businesses," she said. "We are exploring header bidding with a small set of publishers at the moment.")

Two people familiar with Facebook's plans confirmed The Information's report.

"As far as I know, the Facebook header is ready, but being ready and being live are two different things," said one person familiar with the effort but not authorized to discuss it publicly. "This is about Facebook bringing its demand outside of its network walls, over to the the publisher's website," the person said. "The product itself is done."

Marketers may see a launch come late September or early October, the person said.

Facebook plans to heavily focus on serving ads in the open mobile web. "This is absolutely about mobile," the person said. "Even in a mobile web environment, there are header tags and header bidding works. Even in apps, there is a recently developing header concept, but it is not fully baked yet."

Facebook's foray into this type of ad buying shows that it wants to offer a viable alternative to Google's dominance in the ad tech ecosystem, where many players think it has outsized control over buyers and sellers.

The Facebook Audience Network caters to publishers, as well, letting them plug into the network to receive ads bought through Facebook's sophisticated data and targeting technology. But even Facebook has had trouble cracking into the next level of digital advertising on the scale of Google.

Facebook shut down its LiveRail video ad exchange earlier this year, leaving many digital video publishers without a programmatic ad partner. Facebook also scaled back ambitions for its ad server and measurement platform called Atlas.

Still, Chief Operating Officer Sheryl Sandberg said on an earnings call in July that Facebook continues to invest in ad tech and that its Audience Network was a key part of the plans.

Header bidding has been a thorn in Google's side ever since it took off with publishers last year. The technology has since evolved with the header bidding wrapper, which negates negative side effects of the previous iteration such as slower load times for consumers and time-consuming labor for publishers as partners are added.

To stop the bleeding, Google has come up with its own header bidding solution, which is still in early testing.

Still, Facebook seems to smell a potential weakness for Google. It certainly has no intention of bringing its Audience Network into DoubleClick or Adx.

"Google is frankly very defensive because their position is being threatened," the person familiar with Facebook's plans said. "If you now amplify that by Facebook saying, 'Hey, wait a second, look, there's a chink in the armor. All these independent companies have found it, why don't we do the same thing and bring our wallet to bear?' We're actually going to start to see an event that could at a very, very substantial level check the Google monopoly."