Yet Another Programmatic Problem, Bid Duplication, Gets Fresh Attention

The programmatic advertising industry has lately publicly rallied around cleaning up the ecosystem, championing quality over quantity: fewer spammy websites, fewer supply-side platforms and fewer resellers.

Nonetheless, bid duplication—where buyers and their ad-tech partners must sift through multiple bid requests for the same publisher ad slot—persists.

The practice was again foisted into the spotlight earlier this month when an anonymous blog post accused supply-side platform (SSP) FreeWheel, owned by Comcast, of launching a bid duplication project under the name Smart Bidding, citing internal screenshots.

A sell-side partner that seeks to create demand at all costs has fallen out of vogue in recent years as the industry seeks shorter, more transparent supply paths to buy higher-quality inventory. Outside of efforts to remove bid duplication, ad-tech firms have removed buying paths, created tools to cut out ad-tech middlemen and made it easier for brands to avoid ending up on spammy, made-for-advertising websites.

Still, the existing ad-tech machinery, and the economic incentives that undergird it, stymie quick progress.

FreeWheel’s smart bidding solution

The post alleged FreeWheel would send multiple bid requests for the same inventory on a publisher’s site, increasing demand and increasing the likelihood a buyer will bid on that particular publisher. This inflation is not an honest reflection of the publisher’s audience or inventory, and can end up wasting advertiser dollars.

FreeWheel representatives said that Smart Bidding is still in its testing phase and not publicly available, and that the post took proprietary information and shared it out of context. What Smart Bidding actually does is create more inventory on connected television, for example creating opportunities for 15-second ad to win programmatic auctions in 30-second slots, if that’s the publisher’s preference. Programmatic technology is typically designed to return 30-second ads for 30-second slots.

“Smart bidding is a solution that we are currently exploring,” said David Dworin, chief product officer at FreeWheel. “Right now, we are very much in the test, learn and iterate phase, and so we are still learning, improving and innovating to make sure this solution, when it’s ready to hit the market, helps solve for today’s industry needs, while adhering to the highest industry standards, guidelines and best practices.”

Nonetheless, SSPs regularly duplicate bid requests, said Will Doherty, vp of inventory development at demand-side platform The Trade Desk, which has issued several policies over the past five years to try to thwart the practice.

“It’s not something where it ebbs and flows. …. There’s a pretty steady [flow] of it,” Doherty said. “We’re definitely seeing improvement that’s largely the result of us being extraordinarily proactive. It’s certainly far from solved.”

Disrupting programmatic economics

Publishers with larger audiences can send more bid requests and get more bids because their larger audiences make them more valuable. Bid duplication tricks demand-side platforms (DSPs) into thinking that a publisher has more inventory than it really does, Doherty said.

Bids are relatively rare compared to bid requests because there is far more supply than demand, he added.

“These bids are precious and scarce—it’s like fracking,” Doherty said. “[SSPs] inundate the ground with requests and hope to shake loose enough bids to go their way.”

A potential impact of bid duplication is driving up the cost per thousand clicks (CPMs) over time, said Shiv Gupta, founder of ad-tech education firm U of Digital. More bids will eventually generate more demand over time, which will lead to higher prices.

“It will cost [buyers] more money for the same amount of performance, which is a raw deal,” he said.

Of course, flooding the market with supply could depress prices, so the exact impact on CPMs is not certain, other sources said. The bigger issue is that advertisers lose transparency into what they’re buying, said Doherty.

“It can distort all kinds of targeting and metrics because it can make it harder to really understand where audiences are,” Doherty said. “It really makes it harder to assign value in real-time.”

Greener supply chains

Theoretically, publishers should benefit from more demand. But for publishers trying to work with the buy-side to create shorter, more efficient and environmentally friendly supply paths, and hopefully garner higher revenues as a result of selling themselves in a more premium fashion, SSP bid duplication feels counterproductive.

“The whole green sustainability [initiative] is not talking about wanton bid duplication,” said Justin Wohl, chief revenue officer at Salon, TVTropes and Snopes. “It’s taken direct aim at publishers” with inefficient supply chains.

“We can’t control if [SSPs] are gaming and duplicating” a clean supply path a publisher has created, Wohl added.

For now, it’s up to proactive efforts from firms like The Trade Desk and trade bodies to root out bid duplication, as ad-tech’s trading practices aren’t regulated by a federal entity like the Securities and Exchange Commission, Gupta said. And the problem will persist because the incentives of ad-tech firms do not always align with those of advertisers.

“The people who run these auctions… their jobs are to win the auctions,” Gupta said. “When you get told your job is to win the auction, you lose sight of right and wrong.”