The Google ad tech antitrust trial in Virginia has been a font of revelations about how Google benefited from its end-to-end position in programmatic advertising – and how publishers were harmed.
Publishers told AdExchanger they were encouraged to see the DOJ highlight Google’s stranglehold on the ad server market, which they see as their biggest impediment to negotiating with Google, as they’re able to do with other SSPs.
“Publishers complain about different policies and practices, but at the end of the day, Google controls the ad server and the other major points in the pipeline,” said Danielle Coffey, president and CEO of the News/Media Alliance.
“They control so much demand through AdX and AdWords that they have all the leverage,” she added.
Publishers were likewise pleased to see so much scrutiny of Google’s efforts to weaken Prebid-based header bidding by introducing open bidding – an effort they say shows Google never had their best interests at heart.
Splitting the server
One of the central issues in the trial is whether Google’s ad server restricts competition among SSPs and limits publisher control over how they sell ads.
Today, the ad server, formerly known as DoubleClick for Publishers (DFP), is bundled within Google Ad Manager (GAM) alongside Google’s exchange and ad network.
According to the DOJ, Google has a roughly 90% share of the publisher ad server market.
Google Ads demand is funneled through AdX, meaning publishers must use Google’s exchange to access what is the largest source of demand for open web ads. And the only way to access real-time pricing data about that demand is to use DFP.
This arrangement has made it possible for Google to extract 30% of publisher revenue through various fees – and in some cases even more – from ads sold through its platform, said Coffey, noting that the ad server layer is “where Google implemented many of its most anticompetitive policies,” including last look.
Google declined to comment for this story, other than to clarify that Google Ads expanded buying to third-party exchanges through its AwBid program starting in 2015, although this demand is limited to some retargeting campaigns.
The hope among many publishers is a DOJ victory would lead to changes that make it easier for them to use non-Google ad servers and SSPs while still accessing Google Ads demand. Such a remedy could involve the court ordering Google to spin off its ad server into a standalone business or otherwise decouple its ad server from its SSP.
Splitting AdX from DFP “would change programmatic strategies across the industry,” said Justin Wohl, CRO of Snopes.com and TV Tropes. It would also free up publishers to experiment with newer, more innovative ad servers, he added.
Not only would breaking up Google’s ad tech business create competition, according to Coffey, but it could also drive down prices and give publishers the opportunity to choose the best-of-breed option for their needs. “There is no reason Google should be permitted to continue operating the dominant ad server, ad exchange and demand-side platforms,” she said.
However, some on the sell side worry a more competitive ad server market won’t necessarily benefit smaller publishers.
According to a source close to publisher concerns who asked to remain anonymous, transitioning to a different ad server would be a significant lift from a technology and resource perspective, resulting in increased costs for publishers and a likely negative short-term impact on their revenue.
The Prebid prescription
But breaking up Google’s advertising business is the nuclear option. There is an easier way to limit Google’s ability to advantage itself in programmatic auctions.
Publishers generally support current AWS and former News Corp executive Stephanie Layser’s suggestion that Google should create a Prebid adapter for AdX and compete directly with other SSPs in header bidding auctions.
Header bidding – which these days is mostly done through Prebid – has been the industry’s single greatest innovation when it comes to lessening publisher reliance on Google’s ad platform, according to multiple sources who spoke to AdExchanger.
But Google fought header bidding by introducing its own version, called open bidding, that involved Google allowing other SSPs into AdX auctions – with limitations. The arguably fairer and simpler thing to do would have been for Google to participate as just another SSP in Prebid auctions.
“Getting all demand to compete in the same place – Prebid – would be best for publishers, as it would allow for a single auction instead of a chain of auctions like it works today,” said an executive at a publisher tech company who asked to remain anonymous.
However, for publishers to truly benefit from Google competing in Prebid auctions, it would still require the DFP ad server to be spun off from AdX, warned the source close to publisher concerns.
“Participating in Prebid would make AdX compete equally, in theory, across demand sources, but the owner of the ad server and an exchange still has more access to data insights than others,” this source said. “The ad server is still responsible for direct trafficking of campaigns and the final destination of yield, so the ad server owner always knows the winning bids, final clearing prices, et cetera.”
What’s up with UPR?
Speaking of Google’s influence over auction pricing dynamics, publishers have also been heartened to see the court’s close examination of Google’s unified pricing rules (UPR), which prevent publishers from setting pricing floors for individual SSPs in AdX auctions.
“UPR is my least favorite feature that Google ever rolled out, as it seemed to have literally no benefit except to them,” said the publisher tech executive.
For example, the introduction of UPR produced a 40% revenue bump for Google because it allowed Google to bypass price floors publishers had set for AdX that were previously allowing other SSPs to win header bidding auctions, according to an internal Google email filed as evidence in the trial.
Google’s revenue increase from UPR likely came at the expense of other SSPs losing auctions, said the source close to publisher concerns. But “the question is whether the auction environment led to pricing that continues to erode publisher CPMs because of unfair bidding competition,” they added.
Either way, that 40% boost from UPR demonstrates that Google AdX wasn’t a good-faith publisher partner, as should be expected of an SSP, Snopes.com’s Wohl suggested. “We certainly don’t see 40% positive swings in our revenues,” he said. “[And] this Google windfall didn’t come back in reinvestment for publishers, either.”
The email communications between Google executives revealed during the trial only confirmed what many publishers have long suspected about the motivation for open bidding and UPR, said the publisher tech exec.
“When header bidding was on the rise, Google spread misinformation about latency and tried to push people not to use it,” they said. “The fact that they were … coming up with product changes to deal with [header bidding in private] is totally consistent with how they were acting [in public].”
Plus, they added, “The fact that open bidding was priced so low when it was announced was surprising, but a testament to how they knew that header bidding was totally swamping the market and, if they didn’t do something, they stood to lose more than they already were.”
Across the board, publishers appear vindicated – but not at all surprised – at the exposure of Google’s efforts to line its own pockets at the expense of publishers and others in the digital ad ecosystem.
“I wish I was more surprised by any of these emails and excerpts,” said Wohl. “The experience of working with Google’s advantage for nearly 10 years now conditioned me to expect this in its entirety.”
Update 9/18/24: This story was updated to include Google’s clarification on the exclusivity of Google Ads demand.
