Bid Caching Hurts the Progress of Programmatic
The practice risks undermining trust and transparency in ad tech
Heated debates took place across the ad tech industry in recent days regarding Index Exchange’s practice of bid caching. “Bid caching” is a process in which if a buyer loses a programmatic auction, the platform holds onto their bid and uses it for another auction – which can result in the buyer’s advertisement being served on a page that was not the buyer’s original intent to bid on.
Bid caching has drawn attention primarily due to its lack of transparency. Buyers were not informed in advance that this was a regularly occurring event when placing advertisements. Additionally, the method has the potential to inflate bid prices. It carries forward the same bid from its initial first page content placement through to subsequent page inventory that might otherwise be bid on at a lower price point.
The potential for bid caching to cause inflated pricing and lack of transparency could affects all parties — from advertisers to DSPs, and further downstream to publishers. It has the potential to compromise brand safety due to altered auction dynamics, without the new inventory source being fully vetted. In addition, at the end of the day, it could erode buyer’s trust.
At RhythmOne, we have made a brand safety commitment to our demand clients and supply partners which centers on trust and transparency. As such, we have not, do not, and will not support the practice of bid caching on our platform. Not only does it conceivably go against the basic tenets of a transparent exchange, but it has the potential to disrupt the ecosystem of mutual value, upon which our exchange is grounded.
The good news here is that the well-documented outcry led Index Exchange to discontinue its practice of bid caching. Ad tech is actively shining a light on the previously dark corners of its business, and the players themselves are holding each other accountable. Hopefully, this will lead to the creation of systems that abide by higher standards of brand safety and price transparency. And that is an industry that is good for everyone’s business.
This article contains forward-looking statements. In some cases, you can identify forward-looking statements by the words “may,” “likely,” “will,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. All statements other than statements of historical fact are statements that could be forward-looking statements, including, but not limited to, statements about the potential impact and consequences of bid caching. These forward-looking statements are subject to risks and uncertainties, assumptions and other factors that could cause actual results and the timing of events to differ materially from future results that are expressed or implied in the forward-looking statements. Factors that could cause or contribute to such differences include the dynamic and rapidly evolving sector, as well as the highly competitive industry that RhythmOne operates in, which make it difficult to evaluate prospects. These and other risk factors are discussed in RhythmOne’s Annual Report for the period ended March 31, 2018. The forward-looking statements in this article are based on information available to RhythmOne as of the date hereof, and we assume no obligation to update any forward-looking statements.