The ad-tech companies that many publishers use to plug into Google's DoubleClick and other systems say a number of factors have turned out to be likely deal-breakers.
Among them is a 5% cut that Google charges publishers for every transaction through its header bidding alternative, now simply dubbed Exchange Bidding, according to several executives with direct knowledge of the program.
In contrast, Amazon's header bidding tech charges a nominal penny for every 1,000 ad impressions, according to people familiar with its pricing. While Google argues that its method includes services worth the money -- Exchange Bidding protects against malware, for example, and does quite a bit of reporting on the sales process -- some feel that the cost is unwarranted or too much. In publishers' struggle to earn what they consider to be fair value of their ad inventory, a 5% fee is a tough sell.
That's perhaps particularly true when it comes to header bidding, a tech that came along to help publishers make more money from ad sales.
The fight for ad tech
Although Google won't say so publicly, header bidding has shaken its stranglehold on automated ad sales in a fundamental way. Most online publishers previously let Google cherry-pick the best ad inventory around the web and sell it to marketers at a premium. The advent of header bidding tech let publishers solicit bids on their inventory from multiple pools of buyers all at once, driving up prices and eliminating Google's advantage.
The movement against the tech titan's empire has been so successful that powerhouses like Facebook and Amazon have recently joined the fray and now have their own offerings in the space.
Google ultimately responded with Exchange Bidding, but commercial terms -- such as what sort of cut it gets and how it pays publishers -- are still being figured out. Should they stay as they are right now, however, newcomers like Amazon or open-source tech like Prebid may win out.
"When establishing the consensus on what technology will be adopted, I believe publishers will lean toward solutions that connect them directly with buyers and not solutions that put them further away from buyers," said Michael Connolly, CEO at ad-tech company Sonobi.
In Exchange Bidding, Google wants to own the billing and contractual relationships with publishers, something that most ad-tech companies now handle on their own.
There are good points to a setup like that, said Scott Both, director of programmatic sales engineering at Hearst Digital Media, a proponent of Exchange Bidding.
"One benefit of Google paying Hearst directly is the ability to onboard new partners without having to hire another finance person to handle five more accounts to send them an invoice to and collect on," Both said. "That is a nice benefit of it being this centralized payment that Google makes to Hearst or another publisher."
While Rubicon Project is still in trial with Exchange Bidding, it hinted that it will stop offering the product to its publisher clients once that trial ends.
"Publishers have concerns about fee structures and Exchange Bidding," said Tom Kershaw, chief technology officer at Rubicon Project. "Most solutions I'm aware of for header bidding do not charge anything. So any service that tries to charge for just processing transactions, you're going to face an uphill battle. It is not specific to Google, but making money off the header bidding process is something not most exchanges are doing, so it's a concern."
Kershaw says he welcomes Exchange Bidding in general because Google drives a lot of ad demand to Rubicon publishers. But he's skeptical about its success if Google doesn't rethink certain aspects.
Although Exchange Bidding will likely see adoption from publishers, Kershaw said he wonders "how all-in they'll be."
"Most publishers are going to have more than one solution because they don't want all their eggs in one basket," he said. "One of the big stories here is pubs are going to use multiple solutions, and even if they are using Exchange Bidding, they may guide their traffic away from it because they don't like the commercial terms."
"Our goal with Exchange Bidding is to create a solution that gives publishers the features, flexibility and transparency they're asking for while helping them grow their businesses," a Google spokeswoman told Ad Age. "We are delighted with the progress of Exchange Bidding so far. Publishers have adopted the solution with enthusiasm, and both adoption and publisher revenues are running strongly ahead of our initial expectations."
Still, some ad-tech companies that have relationships with publishers remain skeptical.
Evan Simeone, senior VP of product management at PubMatic, said he doesn't see the company working with Google and its Exchange Bidding offering.
"For the near term it is not one of our top priorities," Simeone said. "We are certainly willing to revisit it, but right now we have a million other things that we're working on and it isn't at the top of that list."
"We have a direct relationship with our publishers and we are partners with them," Simeone added. "But one of the Exchange Bidding requirements is Google would own these relationships -- all money would funnel through Google and that's not what we're really looking for, especially when it comes to the publishers we've been working with for a while."
"It also doesn't seem like Google would be out pitching us to other publishers," he added.
PubMatic partners include Amazon, Google's new would-be rival in ad tech.
"We want to work with anybody in the market that's offering a great solution to publishers, is going to help publishers monetize well and is transparent and open in their business practices," Simeone said. "Our strategy is provide the best monetization solutions and be as open as possible. Others might have other priorities."