It’s not typically one will get to listen to sworn witnesses in federal court docket clarify the intricacies of header bidding underneath oath.
However that’s what occurred in the course of the first day of the Google advert tech-focused antitrust case in Alexandria, Virginia on Monday. It was like a crash course in advert tech – and advert tech historical past.
The DOJ’s opening statements talked about first look and unified pricing guidelines. Google’s opening remarks included a reference to dynamic allocation.
In the meantime, there was testimony concerning the finish of the writer waterfall, the distinction between direct shopping for and programmatic, and the nuance between take price and advert server charges. At one level, there was full-on a debate over introducing an Advertisements.txt file as factual proof.
And presiding over all of it is Choose Leonie M. Brinkema, a US District Court docket decide, sitting in a inexperienced leather-based chair on the head of the court docket along with her grey hair knotted into a superbly round bun and 0 endurance for courtroom shenanigans.
As a result of this can be a bench trial, there’s no jury. As soon as the trial wraps in 4 to 6 weeks, Choose Brinkema alone will resolve whether or not Google is responsible of working what the DOJ alleges is a trio of monopolies over the advert server, advert alternate and advert community markets.
Within the meantime, right here’s your Day One obtain.
DOJ’s opening statements
Julia Tarver Wooden, a senior DOJ legal professional, started the day with opening statements for the plaintiff and, as she put it, mentioned “the quiet half out loud.”
One monopoly is dangerous sufficient, Wooden mentioned, however the authorities plans to argue that Google operates three of them. She mentioned Google additionally willfully maintains its monopolies – and management over the “open show promoting market” – by tying its advert server to its advert alternate and making Google Advertisements demand unique to AdX.
Publishers are “completely dependent” on their advert server, and it takes “an act of god to modify,” Wooden mentioned. In response to the DOJ, Google controls between 87% and 91% of the advert server market relying on the geo.
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“Prospects will testify they really feel captive to Google’s merchandise and don’t have any freedom to decide on,” Wooden mentioned. “They’ve to make use of DFP to entry that [AdX] demand and it’s virtually inconceivable to depart – which is traditional tying.”
It’s this sense of frustration that led to the rise of header bidding virtually 10 years in the past as a technique to circumvent what Wooden known as the equal of a silent public sale, the place each bid occurs in secret, however just one occasion will get the prospect to peek within the envelope on the finish and pay one penny extra to win.
“Would anybody name {that a} truthful market?” Wooden requested.
Google’s opening statements
In her opening statements, Google’s lead legal professional Karen Dunn countered that the DOJ’s case is backward-looking and there’s no such factor as an “open internet show promoting” market.
“The federal government’s case is sort of a time capsule,” she mentioned. “Break it open, and also you’ll discover a BlackBerry, an iPod and a Blockbuster video card.”
In response to Google, advertisements are advertisements. And there’s much more advert stock on the market than simply banners and packing containers on web sites. There’s in-app stock, native, video, streaming, social media and different sundry walled gardens.
Google additionally contends that advert servers, exchanges and networks aren’t separate markets. As a substitute, Google competes in a single market made up of consumers on one aspect and sellers on the opposite. By that equation, Google says it controls solely 25% of the market, which is under the Supreme Court docket’s 75% threshold for what constitutes market dominance.
The DOJ is “gerrymandering its technique to market actuality,” Dunn mentioned.
She additionally argued that there’s no proof Google prevented prospects from working with rivals and that the majority publishers work with a number of advert exchanges.
Advert tech zingers
After opening remarks, the trial zipped by 4 DOJ witnesses. (They don’t name the US District Court docket for the Japanese District of Virginia the “rocket docket” for nothing.)
- Witness #1: Tim Wolfe, SVP of advert income operations, Gannett
- Witness #2: Andrew Casale, CEO & president, Index Trade
- Witness #3: Joshua Lowcock, president, Quad Media & former world chief media officer, UM Worldwide
- Witness #4: James Avery, CEO & founder, Kevel
The primary objective of this testimony was to assist show the DOJ’s market definitions and clarify to the decide how advert tech and writer monetization works. It was like a crash course in advert tech.
However there have been additionally a lot of one-liners, wisecracks and noteworthy stats sprinkled all through.
Tim Wolfe, Gannett
* In response to Wolfe, Gannett, which has been a Google advert server buyer for round 12 years, pays north of $15 million yearly on advert tech to serve advertisements – and greater than $10 million of that goes to Google.
* Wolfe additionally described switching advert servers as being like “altering the tires on a race automobile midrace.”
* Gannett noticed CPMs enhance by 15% to twenty% shortly after implementing header bidding.
* At one level, Good AdServer (now Equativ) approached Gannett with a pitch to modify from DFP with the promise of decrease advert serving charges. Gannett thought of the supply however determined to not transfer from DFP as a result of the decrease charges weren’t price dropping Google Advertisements demand.
* Google has been chargeable for as a lot as 60% (and now 50%) of Gannett’s programmatic monetization.
Andrew Casale, Index
* The overwhelming majority of Index’s impressions (83%) come from DFP. The following closest supply is Microsoft’s Xandr within the single digits.
* Index fields 250 billion public sale requests for open internet show every day and solely wins the chance roughly 0.5% of the time.
* Publishers hardly ever if ever change their advert servers, partly as a result of advert servers are like “a utility,” Casale mentioned, and it’s in no way frequent to make use of a number of advert servers, which might make reconciliation, rendering and billing complicated.
* Index frequently runs experiments to decrease its take price. At one level, it lowered its charges to zero with the expectation of an enormous uptick in its win price, however the improve was solely nominal. “You assume we’d win all of the impressions if we’re free, however that was not the case,” Casale mentioned.
* When requested what it feels prefer to compete with AdX, Casale mentioned, “It’s very difficult,” and pointed to the truth that Index doesn’t have the identical entry to programmatic assured impressions. “That’s solely obtainable by Google,” he mentioned, “and it makes our merchandise look poor.”
Joshua Lowcock, Quad Media
* That is the second time Lowcock has testified in an antitrust trial in opposition to Google this yr (!). He was additionally a witness for the DOJ in the course of the lately determined search trial and his testimony on this case mirrors his earlier testimony.
* In response to Lowcock, “open internet show promoting” is a definite market, and different channels, together with search, social media, native, in-app and conventional TV, aren’t a “cheap substitute” for show.
James Avery, Kevel
* When requested what number of publishers Kevel was in a position to persuade to maneuver from DFP to its advert server, Avery mentioned, “I don’t know of any.” When requested why, he mentioned, “We rapidly realized this was not a market we may win due to the tie between Google’s demand by AdX.”
* Avery mentioned Kevel additionally misplaced prospects to DFP, together with Reddit, as a result of it couldn’t entry AdX demand. Kevel ultimately shifted its enterprise away from open internet show and conventional publishers to give attention to retail media and ecommerce.
* Twice previously, Kevel requested Google for entry to AdX, as soon as round 2012/2013 and as soon as a few years in the past. The primary time, Kevel was informed that Google “doesn’t work that method,” with no additional rationalization, and no cube the second time both.
* Kevel makes use of Google’s advert tech as an advertiser to advertise its personal merchandise on search. Why? “If I may keep away from giving one in all my opponents cash, I might,” Avery mentioned, “however Google is just like the default search engine.”
Our flowers
And simply to get meta for a second (lowercase “m”), AdExchanger acquired a few shoutouts all through the day.
The primary reference was to a 2015 article by AdExchanger’s former government editor, Zach Rodgers, which was printed shortly after Casale Media modified its title to Index Trade. The story, primarily based on an interview with Andrew Casale, notes that, on the time, Index projected $200 million in gross income for its fiscal yr.
On cross, one in all Google’s attorneys requested Casale how he may contend that Index is a small firm, which Casale had beforehand finished throughout direct examination, if its income was truly rising. To which Casale just a little tersely defined the distinction between income and gross income.
Then, throughout Avery’s testimony, the DOJ launched an electronic mail alternate from April 2019 between him and AdExchanger’s government editor, Sarah Sluis, about AdWords “kinda” with the ability to combine with different advert servers. Sluis had reached out to dig in after seeing Avery tweet about it.
The emails have been projected on a display within the courtroom, and Avery was requested to learn excerpts aloud.
Avery: “However AdX is sort of fully tied to DFP (Advert Supervisor). We’ve got labored with some prospects who’ve AdX tags, that means they will put them in our advert server or one other, however nobody actually needs to make use of tags anymore since you find yourself with passbacks and different inefficiencies.
“Nearly each advert server has gone out of enterprise due to this integration between AdX and Advert Supervisor. Publishers might need to use one other advert server however they might find yourself giving up a bit of income from AdX.
“It seems monopolies are fairly efficient.”
