‘Waterfall’ setup. It improved publisher revenue by allowing what was then the DoubleClick Ad Exchange to submit real-time bids into DoubleClick’s ad server, thereby increasing competition across demand sources (this became known as ‘realtime bidding’). Dynamic Allocation did not allow programmatic demand to compete with guaranteed line items, to ensure that the guaranteed line items served. In March 2014, Google introduced Enhanced Dynamic Allocation to enable publishers to facilitate competition between a publisher’s direct deals and real-time demand for inventory that previously would have been reserved for sale via those direct deals. This benefits the publisher because it maximises revenue opportunities, without impacting the publisher’s direct deals. In 2015, header bidding emerged and gave publishers the opportunity to put different SSPs in real-time competition for the same impression. When header bidding is used by a publisher, the publisher includes code in its web pages to execute the header bidding process. When a user visits the publisher’s site, the browser calls participating SSPs or other demand partners either directly or via a header bidding server, the publisher has configured to submit bids, and runs an auction between those bids. The header bidding auction is concluded before the publisher ad server ( e.g. DFP) is called. In response, in 2015, Google began developing Exchange Bidding (rolled out globally in April 2018 and now called ‘Open Bidding’), which allowed publishers to invite third-party Ad Exchanges and SSPs to submit real-time bids using industry-standard, server-to-server real-time bidding calls. Those bids are compared with bids from AdX buyers, remnant line items, and the publisher’s guaranteed line items in a first-price auction, with the highest bid (or, in the case of guaranteed line items, imputed bid) winning the impression. This provides a real-time auction for third-party Ad Exchanges and SSPs in GAM. Today, publishers use Open Bidding to get real-time competition between around 30 different third-party SSPs and ad networks. Open Bidding was, and is, Google’s competitive response to header bidding. In September 2019, Google completed the transition from a ‘second-price’ auction system to the Unified FirstPrice Auction for AdX. Previously, under a second-price auction, the price paid by the winner of the auction was set by the higher of the floor price and the second highest bid. Second-price auctions are simple because advertisers have an incentive to bid their true valuation, irrespective of what other advertisers bid. This means that advertisers can achieve their optimal outcome simply by submitting bids equal to the
