In September, Rubicon Project announced that the rise of header bidding called for us to evaluate new approaches to auction dynamics. After reviewing the data from these tests and listening to feedback from our partners, we’re announcing changes that will provide greater transparency and choice to buyers and enhanced monetization for sellers.
Starting January 22, 2018, we’ll select the winner of all header bidding transactions on our exchange on a first-price basis. The winner will be able to choose whether we submit their first-price bid to the final auction in the seller’s header or if they want to use a free Rubicon Project feature called Estimated Market Rate (EMR). This feature looks for opportunities to reduce their bid while maintaining high win rates. Either way, we’re letting buyers choose the method that produces the best outcome for their business.
We’re making the move to first-price in our header bidding auctions for two reasons. First, because it’s transparent–buyers pay what they bid (or less if they choose EMR). And second, because it improves buyers’ access to supply by making it easier to compete with first-price bids from other demand sources in the final auction.
We developed EMR because we recognize that some buyer platforms haven’t yet optimized their bidding logic for pure first price, and others may choose not to do so at all. Based on an algorithm that monitors existing market conditions against our vast dataset of auction outcomes, EMR is an easy way for buyers to adjust to the world of first-price auctions without incurring major technical work. Additionally, EMR enables us to provide sellers with increased revenue and more stable, predictable demand.
Despite all this, there are some things that are not changing: As announced in November, we eliminated our buyer fees to ensure buyers have more winning power on our exchange than ever. In addition, we will use standard RTB flags to share the auction dynamic and auction operation (i.e. header bidding or waterfall) with buyers in the bid stream. And lastly, we plan to continue to run a modified second-price auction for all waterfall transactions (i.e. tag-based implementations, including Private Marketplaces).
We will be using the next six weeks to solicit additional feedback and answer any questions from our partners. Don’t hesitate to reach out to us to learn more about how these changes will work, why we’re making them, and how to best take advantage of them.