Bid Caching of Index Exchange is one of the biggest news in ad industry in 2018. A lot of people have negative opinion about it and Index Exchange disabled bid caching immediately after the news.
Before further reading, I recommend understand Header Bidding first.
Bid Caching
What is Bid Caching? Bid caching cache precious bid and used it later so it largely decrease next bidding time. It sounds pretty good because latency is one of the major problem of header bidding. And before Index Exchange, AppNuxus has already put this functionality into their Prebid library(http://prebid.org/dev-docs/faq.html#does-prebidjs-cache-bids). But why people blame Index Exchange so much?
No communicate
I think the major fault made by Index Exchange is not communicate with their client will enough.
“We didn’t think it was an issue with buyers. We were so surprised. We thought this was an industry practice,” said Drew Bradstock, SVP of product at Index Exchange.
Perhaps better communication would be a great help.
Impact to buyer
- Extra spending: Traditionally, first session is the most valuable. And value decrease after that one by one. Which means makes highest bid on first impression. For example, a buyer bid $5 for first session. But this bid is cached for second session which buyer only willing to pay $2 for it. In the end, buyer have extra $3 spending for the second session if it win.
- Quality: Even though pages are in the same site, the content might be very different. Usually buyer won't put put their ads in pages with inappropriate content. For example, buyer don't want their ads for kid shown in gamble content page. But bid caching might make this happen.
- Exceeding limit: Some buyer will limit their ad buying. It is like you set limit on your credit card so you won't spend too much money. However, bid caching might break it because buyer have no idea if their bid is cached and been used in later time.
Is Bid Caching bad?
I wouldn't say it is bad. After all, it do fix the latency problem. But in order to take its advantages, the whole ad industry may need to work together. For example, in order to prevent exceeding limit, buyer can config not to use bid caching when it meet 50% of limit. SSP need a way to know the page content to prevent quality problem. Even though there are so many problem waiting to be fixed, some people still believe it is a future trend, just like header bidding.
Fun fact
Ad caching: Some people is confusing between ad caching and bid caching. But they are totally different thing. Ad caching only bid once. They preserve the ad and play it later. It is commonly used in mobile game. They store the ad when user is playing game and play ad when paused.
Reference
Ad tech’s bid-caching controversy, explained
Index Exchange Called Out For Tweaking Its Auction
