The big publisher news for August was all about Index Exchange and bid caching. Although the issues haven’t directly impacted any of OKO’s publishers, questions have arisen and we are seeing some secondary impact that certainly warrant us talking more about the issue here on the blog:
What is bid caching?
Bid caching is the process of keeping a bid when a buyer fails to win an impression and they applying that bid to a later ad-request. The usual aim of bid-caching is to supposedly to reduce latency (and therefore faster ad-serving), but it can also push up CPMs. This has caused concern as it can result in buyers paying for an impression that doesn’t quite match what they thought they were getting.
For example: A user visits the homepage of a publisher’s site and attracts bids from 5 partners. Bidder A wins the impression and the other bids are cached. The user then opens a second page that the cached bids are applied to the resulting ad request. Bidder B wins, using the price they were willing to pay for the homepage impressions, but their ad is shown on a deeper page.
Why the controversy?
The recent controversy has been around the revelation that Index Exchange has been using bid caching in its header bidding wrapper without disclosing this to buyers. If buyers aren’t getting what they think they are buying then this is bad for all parties, as it reduces trust in the system which will only send bids in one direction. Dan Wilson, CEO of London Media Exchange put it well: “It’s like going to supermarket and getting beans, and at checkout, they swap it out for something else.”
It is worth noting that Index Exchange are not currently using bid-caching.
Am I affected by bid caching?
Index Exchange’s use of bid caching was limited to to publishers using the Index Exchange header bidding wrapper. Publishers having Index Exchange bid through another wrapper were not using cached bids. OKO do not use the Index Exchange wrapper (where we use Index exchange it is through their adapter being used in another wrapper, or through Exchange Bidding). This means that OKO managed header bidding was not directly affected.
Publishers who utilise Index Exchange through another wrapper may still see a revenue impact though. Several buyers have announced that they paused buying through Index Exchange as a result of the controversy. This means that bids may be reduced from all integrations featuring Index Exchange.