As ad tech rivals sought to compete with Google nearly a decade ago, the adoption of header bidding was so monumental to fighting the giant’s grip on the display ad market that it played a part in at least one major player’s IPO roadshow.
“We were so excited about header bidding that when we went public we had potential investors watch a [explainer] video first,” said Jed Dederick, who is now The Trade Desk’s chief revenue officer. “We felt there was the opportunity to compete meaningfully that we wouldn’t have without it.”
The recollection came last week during Dederick’s testimony in the ongoing U.S. Justice Department’s ad tech antitrust case against Google, which began last week in federal court. However, Dederick is just one of several ad tech executives the U.S. government has brought as witnesses in federal court to describe the ways Google has used its dominance to allegedly harm rivals, publishers and advertisers. Others who testified last week include current and former execs from past and present Google rivals including PubMatic, Equativ, Rubicon Project, AppNexus and even Facebook.
The potential of header bidding in the mid-2010s gave publishers a way to offer ad inventory to multiple exchanges simultaneously instead of giving first priority to Google’s own ad exchange, AdX. In fact, The Trade Desk — a longtime frenemy with Google — also cautioned investors about the risks because of Google’s role in the market. According to Digiday’s review of The Trade Desks’ S-1 filing, the company — founded in 2009 — noted Google already was one of The Trade Desk’s largest inventory suppliers.
“If Google or a similarly situated company limits our access to advertising inventory, our business could be adversely affected,” according to the S-1. “If our relationships with any of our suppliers were to cease, or if the material terms of these relationships were to change unfavorably, our business would be negatively impacted.”
The Trade Desk wasn’t the only ad tech giant in the spotlight. Also testifying this week was PubMatic founder and CEO Rajeev Goel, who talked about the challenges of competing with Google, especially in terms of scale and win rates. One of the things he mentioned was PubMatic only won less than 1% of its AdX auctions. He also noted that Last Look benefits Google more than others, adding “it’s hard to imagine any scenario where Last Look is good for publishers.”
“To be relevant, scale is important,” Goel said. “Scale begets data, data begets performance. It’s a virtuous cycle … Scale is something any provider in our industry has to focus on.”
Google’s attorneys already have challenged various ad tech witnesses brought forth by the Justice Department. It’s also used cross-examination of current and former Googlers in an attempt to shape the narrative as something less than nefarious. Other witnesses called by the DOJ include YouTube CEO Neal Mohan — who testified yesterday— with several more Googlers testifying this week.
The DOJ also entered into evidence an internal email between PubMatic execs that assessed the impact of unified pricing rules (UPR). According to the email, UPR impacted PubMatic revenue in the range of between -3% and -10%, with the report author’s best guess being -6% and -7%. Goel also noted that PubMatic considered building its own display ad server at one point, but then decided Google already dominated the display network — prompting PubMatic to focus on the mobile app ad market as a new space.
Throughout his testimony, Dederick described the challenges TTD has had competing with Google on the display ads business — something that improved with the introduction of header bidding. He also explained why he didn’t see various ad formats as interchangeable. This contradicts Google’s defense that display ads compete with social ads, CTV ads and other formats — a narrative that Google lawyers have used in cross-examination when asking companies like TTD and others about their growth in CTV and digital audio.
That also came up during the first part of cross-examination when Google used its questioning to see which areas TTD competes across the industry. When Google attorney Karen Dunn asked if TTD competes with Google, Dederick said no and that TTD only competes with DV360. When Dunn asked if TTD competes with the Google Display Network, he again said it only competes with DV360.
During questioning from the DOJ, Dederick explained that TTD has expressed concerns with Google related to auction transparency, auction integrity and supply path transparency. He also noted that to compete it needs access to scaled inventory, which is why bidding into AdX is so critical. In later testimony, he told the DOJ’s lawyer that header bidding created “a more liquid market with significantly more price discovery …. Search is probably the only place in the whole industry where there is more demand than supply.”
When asked by U.S. District Judge Leonie Brinkema what would happen if Google were “blown apart” as a result of the antitrust litigation, Dederick said he wasn’t entirely sure yet but that “I don’t think other publishers would sit around for long before exploring alternatives.”
He also noted the conflict of interest when an ad exchange and DSP are owned by the same operation — which Google has with AdX and DFP. “Ad exchanges and SSPs should be representing publishers … It’s important we are honest and open about what we’re after.”
Quality issues like ad fraud and brand safety also came up with various witnesses throughout the first week. When asked if header bidding made inventory more risky — an argument that’s part of Google’s defense — many said it didn’t. Dederick also began to mention a past Adalytics report which found Google as one of the largest offenders of serving ads within made-for-advertising content, which he noted is a “huge problem” for the industry. However, Google then objected on grounds of hearsay and ended his answer.
“It feels like so much of the arms race of our industry has been around supply chain optimization,” Dederick said during his testimony.
Equativ CEO Arnaud Creput testified that his company — formerly known as Smart Ad Server — lost 95% of its customers to DoubleClick For Publishers. According to Creput, the SSP started to operate in the U.S. in 2014 but found it “almost impossible” to compete with Google’s dominance. It was also hard to get customers to switch from Google to Smart Ad Server because of the switching costs, adding that Google’s ad server added lines of code to its customers’ integrations which made it harder for them to switch.
“One reason we didn’t lose [customers] was we didn’t sign them,” Creput said. “We pitched them, but we didn’t sign them.”
Tom Kershaw, former CTO of Rubicon Project, also recalled Rubicon abandoning its plans to develop a DSP, adding that he “killed it” when he joined because it seemed impossible to compete with Google. Like others, Kershaw’s emphasized the importance of transparency and interoperability. He noted that it was important to have access to bids and knowing why they lost — data that Google had for its exchange that others didn’t. Kershaw also recalled partnering with AppNexus to create Prebid.org was a way to create an open-source option where there were “no secrets or lies or obtuse business practices.”
Kershaw said the founding of Prebid.org aimed to level the playing field through header bidding. The way Kershaw put it, Google’s dominance in winning bids allowed it to gain valuable insights into the system, and that understanding seeing all bids was crucial for fair competition.
“We called header bidding the tide that rises all boats,” Kershaw said. “The best way to get good at bidding is to lose a lot.”
The last witness of week one was Brian O’Kelley, co-founder of AppNexus, whose testimony was played in video format in court. One thing he noted was that Google’s unique demand was tied to search — something that contradicted a narrative Google’s lawyers have at times pushed that this case isn’t about search: “If you think about search, Google could do search targeting. It wasn’t just a unique platform, but also [had] unique knowledge of user behavior.”
O’Kelley also said Google had a hard time competing with rivals early on and noted the acquisition of AdMeld gave Google tools it didn’t have before. O’Kelley also described the deal as being “more of an expertise acquisition than a technology acquisition” and mentioned the impact of Google only letting Adsense bid in the Google-owned ad auction.
“[Google’s] wasn’t the best ad server, but almost every other server went out of business or was sold for scrap,” O’Kelley said.
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