Bid caching – programmatic innovation or an assault on trust and transparency?

David Murphy

As some advertisers start to take at least some of their media buying in-house, Oliver Gold, UK managing director of YOC, considers the part that controversial tactics like bid caching have on these decisions.

The latest controversy to hit the programmatic world surfaced in August, when it came to light that a new practice was being used that very few people knew was happening in the background.

Devised by the ad marketplace Index Exchange and hailed as the latest innovation in programmatic bidding, this was bid caching. New technology 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 what they saw as 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 bidding on a specific user profiles such as ‘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 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 control internally. Only last week, T-Mobile announced that it is taking more control over its media buying, following on from Vodafone’s announcement a few months earlier that it was bringing digital media buying in-house.

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.

According to eMarketer, by 2019, 83.6 per cent of all US digital display ads will be bought, served and sold using automated technologies. But 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 or the perceived lack thereof in the ad tech space. It seems that brands don’t trust their agencies and buyers are not trusting their tech partners, and as a result, we are hearing more stories of advertisers in-housing certain media functions. Unfortunately bid caching is another blow for the industry, a case of two steps forward, one step back.

Oliver Gold is UK managing director of YOC.