Understanding PreBid: Its Inception, Impact and How it Changed the Game

The advertising industry has always been a dynamic and rapidly evolving space. With the rise of programmatic advertising, new technologies and methodologies are constantly being introduced to improve efficiency, transparency, and revenue for publishers. One such innovation is PreBid, a solution that has significantly changed the advertising landscape. In this blog post, we’ll explore why PreBid was invented, how it has transformed the advertising ecosystem, and why these changes have led to shifts in the reporting metrics within Google Ad Manager.

Why Was PreBid Invented?

Before the advent of PreBid, the programmatic advertising ecosystem was largely dominated by the concept of "waterfall" auctions. In this model, ad inventory was offered to buyers in a sequential manner, with priority given to certain demand sources over others. This meant that publishers were not always getting the highest possible revenue for their inventory, as bids from lower-priority buyers were only considered if higher-priority buyers passed on the opportunity. This lack of transparency and competition led to inefficiencies and lost revenue opportunities.

The real "nail in the coffin" was when Google gave their own AdX Advertising platform Dynamic Allocation.  Dynamic allocation very much changed how Programmatic advertising was priced inside of Double Click For Publishers - which was the name of Google Ad Manager at the time.   Previously, the price of every ad had to be manually set by the AdOps staff targeting the campaign, which worked great for traditionally sold ad campaigns between a salesperson and a brand.   However when it came to selling off your remaining inventory, even though advertisers were bidding in real-time, the pricing had to be manually set by publishers.   Google gave their own platform true real-time pricing, allowing it to even outbid your direct advertisers.   AdX revenues skyrocketed for publishers as it opened an entirely new channel and arguably legitimized the entire idea of programmatic advertising.   There was one critical flaw though, Google only gave themselves this access while all other networks had to be integrated in the traditional Waterfall method, where pricing was manually set for each competing network.   

PreBid was invented to address these challenges. It introduced a more transparent and competitive process called "Header Bidding." With header bidding, multiple demand sources can bid on inventory simultaneously, allowing the highest bid to win, regardless of the buyer’s priority in the auction sequence. This approach not only maximizes revenue for publishers but also creates a more level playing field for advertisers, who now have equal opportunities to win impressions based on the value of their bids.   Header Bidding gave every SSP on the planet the instant ability to function exactly the same way as AdX was with Dynamic allocation, and even bring competition to AdX in its real-time bidding methodology.

How PreBid Changed the Advertising Landscape

The introduction of PreBid and header bidding had a profound impact on the advertising landscape:

1. Increased Competition and Revenue: By allowing multiple demand sources to bid simultaneously, PreBid increased competition for ad inventory, leading to higher bids and, consequently, increased revenue for publishers.
   
   
2. Greater Transparency: PreBid brought more transparency to the auction process. Publishers could now see the bids from various demand sources, allowing them to make more informed decisions about their inventory.
   
   
3. Shift in Power Dynamics: The rise of header bidding shifted some of the power from traditional ad servers and exchanges to publishers. This gave publishers more control over their inventory and the ability to optimize revenue across multiple platforms
   
   
4. Enhanced User Experience: With more competition and higher bids, publishers could afford to be more selective about the ads they served, improving the overall user experience on their websites.

The Impact on Google Ad Manager Reporting Metrics

As PreBid and header bidding gained traction, they introduced new complexities into the ad serving process, particularly in how impressions, revenue, and other key metrics are tracked and reported in Google Ad Manager (GAM).

1. Discrepancies in Reporting: One of the most significant changes that publishers noticed was an increase in discrepancies between metrics reported by PreBid and those reported by Google Ad Manager. This is because PreBid runs an auction before the ad server (GAM) processes the final winning bid. As a result, the way impressions and revenue are recorded can differ, leading to discrepancies in reporting.
   
   
2. Complexity in Attribution: With multiple demand sources bidding simultaneously, attributing revenue to specific sources became more complex. Google Ad Manager’s traditional reporting metrics were designed for a waterfall model, where attribution was more straightforward. The introduction of header bidding required new reporting methodologies to accurately capture the contributions of various demand sources.
   
   
3. Ad Server Behavior: PreBid can influence the behavior of Google Ad Manager’s ad server. For example, GAM may not always be aware of bids that occurred in the PreBid auction, leading to potential mismatches in the final reporting data. This requires publishers to adjust their reporting and optimization strategies to account for these nuances.
   
   
4. Need for Custom Reporting Solutions: To bridge the gap between PreBid and Google Ad Manager, many publishers have turned to custom reporting solutions or third-party analytics platforms that can better integrate data from both sources. This allows for a more holistic view of performance and helps in resolving discrepancies.  Most Ad Management companies that run PreBid stacks for publishers (Like Advally) offer a great Dashboard that offers these kind of metrics for you. 

Challenges and Limitations: Navigating the PreBid Integration

Despite its advantages, the integration of PreBid with Google Ad Manager is not without challenges. Publishers may face technical complexities during the setup process, including the need to properly configure their ad server and ensure seamless communication between PreBid and Google Ad Manager. There is also the ongoing requirement to stay updated with both platforms' evolving features and best practices to maintain optimal performance.

Moreover, some publishers may experience increased page load times due to the additional scripts required for header bidding. Ensuring that user experience is not compromised while maximizing ad revenue is a delicate balance that publishers must manage. Adapting to the intricacies of auction dynamics and understanding the implications of bid density, bid throttling, and latency are among the other challenges that come with the territory of PreBid integration.

PreBid is a major workaround for Google Ad Manager.   We can not express enough how much it will throw off the data in your Google Ad Manager account.   Direct campaigns remain unaffected, as it does not run against these but you will have to rely on a completely different  set of metrics to ascertain performance of your programmatic stack when utilizing PreBid.   

Conclusion

PreBid was a game-changer in the world of programmatic advertising, offering a more transparent, competitive, and revenue-maximizing alternative to the traditional waterfall auction model. However, its introduction has also brought new challenges, particularly in the area of reporting metrics within Google Ad Manager. As the advertising ecosystem continues to evolve, publishers and advertisers alike must adapt to these changes, leveraging new tools and strategies to maintain accurate reporting and optimize their performance in this new landscape.