By Mathieu Moyne, Associate Director, Solutions Consulting, Xandr
After the rise of prebid and header bidding, we are today observing a new revolution in digital selling habits. While advertising requests have been historically managed in browsers, more and more traffic is now handled server-side.
In 2022, most of the sell-side ad technologies are offering a Server-to-Server (S2S) solution in their platform. While these solutions present many advantages, it is interesting to understand how they are changing the context of digital selling, and what could be their long-term impact.
A way to answer the complexity of header bidding
Header bidding has been the best way of optimising the publisher’s programmatic revenue for many years. Nevertheless, it is also true that the setup of these technologies on a web page or an app requires technical resources for implementation and support. Furthermore, browsers have their own technical limitations: performance is degraded when adding more than a certain number of demand partners (typically over six or seven). Without mentioning user experience due to potential latencies.
S2S header bidding solutions are getting rid of these limitations. The number of demand partners is not an issue anymore with a server that is far more powerful than a browser. Moreover, the latency limitation vanishes as backend exchanges are significantly faster than any client-to-server communication. But the key advantage of S2S remains in its capacity to be activated without any change on the publisher properties. Everyone knows the complexity of requesting a modification to its IT/Web/In-app technical team. A few clicks are enough to activate any new type of demand, based on the current integration. Testing, validating, or changing new tech partners in just a minute is now reality.
Lastly, these solutions often add an additional layer of features which enhance user experience and day to day usage. User Interface (UI), targeting capabilities, reporting, analytics, troubleshooting features…Everything is made to simplify what has been the pain points of header bidding in the past.
Why server-side is not today replacing client-side
Even though the S2S business is widely expanding, client-side integrations remain well established in publisher stacks. The first drawback of S2S is linked to cookies. Third-party cookies have been the dominant user identifier in the advertising industry for years. But when activating a server-side setup, you are only getting the browser cookie of the first technology you are calling. This can be compensated by doing cookie syncing between the different technologies, but the match rate won’t be as good as an 100% client-side rate. Also, as third-party cookies are disappearing, this problem might evolve in 2023.
Another blocker to think of is the lack of control and transparency. Effectively, publishers are often driven by ad quality, and need to be able to monetise while following legal requirements (like GDPR). The simplification brought by S2S technologies can also sometimes take these aspects out of the publisher’s sight. This can lead to a “black box” effect, which could be dissuasive.
Finally, the number of paths to access demand are potentially increased as the S2S solutions trend. Even though some publishers prefer to keep control and restrain their supply access, some want to activate the maximum number of partners and demand sources. Ironically, on the other side of the coin, demand side platforms (DSP) are implementing supply path optimisation algorithms to optimise their inventory sources and reduce potential paths.
The future of digital selling
Knowing this context, what should be the future of digital ad selling? As explained, S2S solutions are too convenient to stop. It might even become the first way of monetising inventories in open programmatic at some point. But how to overpass its current friction points?
First, publishers should be as confident with server-side as they are today with their header bidding stack. And then, S2S should be able to address future challenges of the digital advertising industry, like third-party cookie deprecation, legal requirement evolutions, identity and transparency. A solution like Prebid Server Premium (PSP) offered by Xandr is a good example to illustrate this: it is built on top of Prebid Server open-source code, which makes it transparent, safe, flexible, and future proofed.
With these conditions fulfilled, no doubt server-side bidding will continue to expand, shifting from a simple additional feature to the unique and best way of selling digital ads in programmatic. Server-side has already taken a significant place in the digital advertising industry and its adaptation to the new market standards should help the advertising industry to become easier, safer, and better.
*Xandr is a client of Bluestripe Communications, owned by Bluestripe Group, owner of NDA