header bidding auction

The value of exchange bidding

Neera Shanker Ad Ops

Exchange bidding, also known as Exchange Bidding in Dynamic Allocation (EBDA), is a server-side unified auction. It’s where ad exchanges and SSPs compete with Google Ad Exchange to win impressions. This was Google’s response to header bidding and the need to reduce the complexity of header bidding. 

Prior to switching to a first-price auction, Google Ad Exchange had the “last look” at all impressions and would have an opportunity to place the last bid. With last look, Google could essentially out-bid advertisers of an impression by a very small margin. This wasn’t particularly liked by many publishers. Google’s introduction of exchange bidding allows other exchanges and SSPs to compete with Google Ad Exchange in a unified auction. Thus, creating an equal playing field.

What’s the process of exchange bidding?

  1. An ad request is triggered and passed to the Ad Manager ad server.
  2. Ad Manager runs a unified auction to determine the best yield for the available inventory.
    a) Ad Manager selects the best-trafficked line item to compete.
    b) A bid request is sent out to all yield partners (Ad Exchange, third-party exchanges, and networks).
    c) Yield partners run their own auction and return to Ad Manager with the most competitive bid.
    d) Ad Manager hosts a unified auction and selects a winner.
  3. Finally, Ad Manager returns the request to the page and the winner’s ad is displayed on the publisher’s ad space.
Infographic on Exchange Bidding
Image Source: Google Ad Manager

Why exchange bidding?

Exchange bidding is beneficial to publishers for the following reasons:

Easy implementation — Ad Exchange is handled server-side. There is nothing to be installed on the publisher’s website(s). This also means there is no need for updates or maintenance.

Reduces latency — Exchange bidding runs server-side. Meaning no additional JavaScript needs to be loaded in the web browser. Pages now load faster. In addition to not requiring additional JavaScript, exchange bidding happens within Google’s infrastructure. This makes the response time faster for bids, ads being served, and loaded pages.

Better user experience — More publishers prefer this process as reduced latency produces a better user experience. 

What’s the difference between exchange and header bidding?


Exchange biddingHeader bidding
Auction typeServer-to-serverClient-side
Level of technical knowledge requiredMinimalAdvanced
AdvantagesReduced page latency and overall reduced ad complexityGreater transparency and control, with better cookie matching
DisadvantagesLess transparency, lack of cookie matchingIncreased page latency, increased ad complexity
PaymentsManaged by GoogleManaged by individual publishers

There will always be pros and cons between header bidding and exchange bidding. Neither is necessarily better than the other. Header bidding takes place in the user’s browser before the highest bid is sent to Google Ad Manager to conduct an exchange bidding auction. These auctions can work cohesively together or separately. As a publisher, it’s about your needs and what you want out of your ad monetization.

Interested in maximizing your ad revenue with exchange bidding? Sortable can help. We are partnered with Index Exchange, OpenX, Rubicon, PubMatic, and Yieldmo (among others), all of which support EBDA. Email success@sortable.com with any questions or request our demo to learn more.

Waterfall Yield Management

Being publishers ourselves, we have dealt with this issue in the past and have developed an Ad Optimization System to help optimize our ad inventory.

Determining which ad unit will produce the highest yield requires a great deal of data. With around 1 billion ad impressions served each month, this system allows us to analyze a great deal of traffic profiles and demand partners under different circumstances. Using our proprietary multi-variant testing allows us to create a profile of different publishers’ site traffic. This model evolves over time, further improving ad performance.

Using machine learning and our decision engine technology, we are able to make real-time decisions to help publishers stack the deck in their favor. Our technology analyzes the available ad inventory every time an ad is displayed. It then decides which ad network serves the ad with the highest CPM. If that network doesn’t fill the impression, our system will record that and passback the impression to the second-best network until the ad is served.

Our Ad Optimization System puts publishers in control by speeding up their ad deployment, decreasing loss, and increasing yield, all without having to manually adjust their ad stack.