Bid Caching – An innovation in programmatic or reopening the trust wound?

Last month, there was another brouhaha in the programmatic ad world. It was revealed that was a new ad-buying practice was happening and apparently very few people knew that it is going on.

Devised by the ad marketplace Index Exchange and hailed as the latest innovation in programmatic bidding we discovered a practice called ‘bid caching’. New technology that was designed to reduce latency, thereby creating faster ad serving. It was a supposed master stroke by the company, it’s just a shame they didn’t tell anyone they were doing it.

Many ad buyers were surprised to have been duped by yet another ad tech deception, but is this a big fuss over nothing?

Bid caching is the process of retaining a bid when a buyer fails to win an impression and then applying that bid to a later ad-request. The technique is used to extend bids in programmatic ad auctions, by tweaking the ad targeting criteria without the buyer knowing. DSPs (demand side platforms) bidding on specific user profiles, i.e. High net worth automotive enthusiasts, found that their bids were rolled onto other auctions containing different user attributes.  Or, to put another way, buyers were not getting what they were paying for.

Does bid caching help to reduce latency? Yes, it does, particularly across platforms like mobile, so publishers are of course open to the practice. However, buyers take a very different view, mainly because of the way it was happening. They felt somewhat cheated and who can really blame them?

The world of ad tech has come under the microscope many times in recent years. Last year we had the problems with bot fraud which resulted in the closure of companies linked to the practice, and more recently the issues of ad viewability. Marketers are concerned about a lack of transparency in relation to media placement, specifically the results they are getting or where exactly their ads are appearing and what was paid for them. This is leading to more advertisers taking programmatic buying in-house, giving them greater controls internally. There have been many questions raised about how media is being bought and traded. Brands, agencies and tech vendors need to demonstrate their ethical practices and let people know what they can expect from their products and services. This also applies to ad exchanges.

It is estimated that by 2019, 83.6% of all US digital display ads will be bought, served and sold using automated technologies. This is according to eMarketer. While the future is looking good for programmatic it means that it will come under even greater scrutiny, and partnerships will only work well if there is transparency and two-way trust.

This is an industry built on innovation, the ad world is highly demanding and constantly needs invention to drive it forward. We are continuously developing new ad technology, as are many other companies involved in programmatic, and the industry needs that to thrive. Bid caching is without question a clever piece of technology but you cannot introduce something like that without making sure everyone is happy to use it. That said, it has been put on pause for now and is unlikely to continue in its current form.

The main issue here is about trust and the perceived lack thereof in the adtech space. However, agencies must play their part too. One option is to set up their own “cyber fraud” divisions to audit log level data from their tech partners and ensure no untoward auction dynamic manipulation is occurring. Agencies do need to be more active in preventing unethical, opaque practices, after all they have a responsibility to their clients and ultimately recommend these tech partners to them.  

Ultimately, whichever way you look at it,  bid caching is another blow to the industry, so it’s a case of two steps forward, one step back.

Interested in hearing leading global brands discuss subjects like this in person?

Find out more about Digital Marketing World Forum (#DMWF) Europe, London, North America, and Singapore.  

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