Facebook, Header Bidding And The Fight For Control Of The Publisher Ecosystem

mikecaprioThe Sell Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Mike Caprio, general manager of programmatic at Sizmek.

Most of the buzz around Facebook’s entry into header bidding is about disrupting Google’s dominance across its publisher stack, but there is a bigger development that the industry needs to heed.

Facebook was isolated from the rest of the web prior to its ad exchange, FBX. Its ads used to be located squarely in the right-hand rail on the browser and targeted based on Facebook’s data. After signing deals with key partners that enabled it to serve ads based on offline behavior and in-store purchases, Facebook decided it wanted to extend its reach to the larger web, leading to the acquisition of Atlas and LiveRail.

Known as the “Google playbook,” this was designed to control both the demand and sell sides by proving the value of its inventory to advertisers and delivering opportunities for generating mobile and video ad revenue to publishers.

But somewhere along the way something happened. LiveRail was shuttered, and Atlas is being used not as a traditional ad server by its small client base, but as a people-based cross-device and attribution tool.

I believe that Facebook learned along the way and realized that it can have its cake and eat it too. It can protect its treasure trove of data, provide audience extension beyond the Facebook platform, collect more insights on behavior beyond its four walls and disrupt Google’s and other progressive buyers’ first-mover advantage for in-browser ads, all without a traditional “stack.”

What should be of concern to the industry as a whole is the growing power of the two digital titans, which together accounted for an estimated 85% of incremental digital spend in Q1.

Not only will this trend continue, but Facebook entering the header may leave everyone else in the dust. Many publishers won’t want to have more than four or five header-bidding partners because more is a hassle or will cause latency issues, so now Facebook will have one of those slots. Sell-side companies that offer header-bidding technology will now go head-to-head with each other for the remaining slots, leading to more consolidation in the market.

Facebook’s continued push to align itself closer to publishers is clearly designed to ensure this reality. The company designed Instant Articles to speed up content delivery for publishers while protecting them from the ad blockers. Facebook has also very publicly pushed back against ad blocking on desktop, and now it is developing header-bidding technology to provide better eCPMs for these same publishers on desktop. Sounds great, right?

On one hand, Facebook’s entry into header bidding can seem like a boon for publishers, which have been able to increase CPMs by as much as 40% to 50% in some cases. However, as publishers are increasingly challenged to drive audiences to their owned and operated sites, a Facebook header-bidding solution is just another indication that publishers are losing control of their business to the search and social media giants.

Even though Facebook will be driving demand at a higher CPM than in the open market, it comes at a cost for the publishing industry. Continued reliance on Facebook as a platform is a double-edged sword. Today it means protection against the sharks circling in the ecosystem, but in the long run it can mean disintermediation and commoditization of content.

A very recent example of this was when Facebook changed its news feed algorithm to prioritize posts from users’ family and friends; by putting its users first, Facebook immediately impacted the traffic of many publishers. Media companies are facing a reality where they are giving up the keys to their own castles, and a Facebook header-bidding solution is just another step in that direction.

Follow Sizmek (@sizmek) and AdExchanger (@adexchanger) on Twitter.

 

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