Bid Caching in Ad Tech: Benefits, Challenges & Future

Updated on: December 26, 2023
Bid caching is a controversial topic in ad tech. Explore the benefits and challenges of the technique, and learn about potential solutions.

Bid caching has been a hot topic in the world of ad tech lately. While some are hailing it as the next big thing in advertising, others warn against the potential risks and downsides. But what exactly is bid caching, and why is it causing such a stir?

What Is Bid Caching?

Bid caching is a technique some publishers and ad exchanges use to speed up page loading times by using bids received in previous auctions to fill up subsequent impressions. Essentially, it allows publishers to serve ads without making new requests to the exchange every time. 

However, bid caching has raised concerns about fairness and transparency, particularly for buyers. When a buyer submits a bid for a specific impression, they expect it to be used only for that impression. 

How Bid Caching Works?

  • A publisher sends an ad request to demand partners for a specific impression on their website.
  • The exchange collects bids from advertisers for that impression through a real-time auction.
  • The highest bidder wins the auction, displaying their ad on the publisher’s website.
  • With bid caching, the exchange holds the bid details from the previous auction, including ad size, site, user targeting, and bid constraints.
  • The next time the publisher requests an ad impression with the same ad unit, the exchange uses the winning bid from the previous auction to fill that impression instead of starting a new auction.

This process continues for the following ad placements until the time limit runs out or the bid is chosen, and the ad is shown. If the user reloads the page, the previous bids are lost, and the process starts again.

Another technique to consider in the context of speeding up page loading times and reducing ad requests is bid pooling. Although bid pooling shares some similarities with bid caching, it has notable differences in how it collects and auctions off ad requests. 

Let’s explore bid pooling and how it differs from bid caching.

What Is Bid Pooling?

Bid pooling is a technique used by some ad exchanges and publishers to speed up page loading times and reduce ad requests. It creates a pool of ad requests and auctions them off together rather than holding separate auctions for each request. 

This approach allows publishers to improve page loading times while allowing advertisers to bid on multiple impressions.

Comparing Bid Pooling and Bid Caching:

Both bid pooling and bid caching share the goal of:

  • Reducing ad requests
  • Improving page loading times

However, they operate differently:

  • Bid pooling collects multiple ad requests and combines them into a single auction.
  • Bid caching uses the second-highest bid from the previous auction to fill up subsequent impressions.

Implications for advertisers:

  • In bid pooling, advertisers may have less control over their bids and the impressions they are bidding on, as the context of a webpage and targeting criteria for a user may not be the same as in individual auctions.
  • Both techniques raise concerns about transparency and fairness, particularly for buyers, and may impact targeting and brand safety.

Benefits for Publishers

Here are some more details about the benefits of bid caching for the sell side:

  1. Reduced ad requests: By using bids from previous auctions, publishers and ad exchanges can reduce the number of ad requests and improve page loading times, improving the user experience and reducing latency.
  2. Increased revenue: With bid caching, publishers can potentially maximize the use of available ad space, as it ensures that more ad slots are filled with relevant ads. By reducing the number of unsold impressions and maintaining a higher overall fill rate, publishers can effectively increase their ad revenue.
  3. Improved yield: Bid caching can help publishers and ad exchanges better manage their inventory and optimize yield by using bids from previous auctions to fill up subsequent impressions.

Concerns for Advertisers

While bid caching can benefit the sell side by reducing ad requests and improving page loading times, it raises concerns and challenges for buyers. 

Here are some of the main concerns associated with bid caching:

Lack of transparency: Buyers may not be aware that their bids are being cached and used in subsequent auctions, leading to decreased transparency and fairness in the bidding process. 

In this context, transparency refers to the visibility and openness of the auction mechanics, while fairness refers to equal opportunities for all bidders to participate and compete for ad placements.

Impact on targeting and brand safety: Bid caching can potentially impact targeting and brand safety because the context of a webpage and targeting criteria for a user may change between auctions. 

For example, a buyer may have intended their bid for a specific impression on the home page, but bid caching might use that bid for an impression on an unrelated article page, which could be less relevant or appropriate for the advertiser’s message.

Overvaluing impressions: The first impression in a series typically holds greater value as it is more likely to capture the user’s attention and generate engagement. 

The term “value” here refers to the likelihood of user engagement, viewability, and potential return on investment (ROI) for the advertiser. However, bid caching can potentially dilute the value of subsequent impressions by using bids intended for more valuable placements, leading to buyers paying higher prices for less valuable ad slots, which can negatively impact their ROI.

To address these concerns, some ad tech companies and industry groups have proposed solutions such as bid shading, which adjusts bids in real-time based on the probability of winning the impression, or bid enrichment, which adds more data and context to each bid to improve targeting and relevancy.

Is Bid Caching Right or Wrong?

Bid caching has been controversial in ad tech, and it’s natural to wonder if it’s a good or bad practice. While some argue that bid caching is dishonest and undermines transparency and fairness in the advertising ecosystem, others believe it can be done correctly without compromising ethics.

Examples of Bid Caching Being Done Right

It’s worth noting that not all instances of bid caching are inherently problematic. In fact, some publishers have implemented bid caching responsibly, leading to improved page load times and a better user experience.

1. Topix

Topix, a slideshow publisher , has used bid caching to reduce the number of ads calls it needs to make to render ads for a user. Before implementing bid caching, the publisher made 70 ad calls for a user, but now it needs to make fewer calls. 

Topix has disclosed that it caches bids for 20 seconds before presenting them to bidders. They claim brand safety is not compromised, as the previous bids are reused within the same slideshow. In this scenario, the context and URL remain consistent, ensuring the ad placements are still relevant and safe.

2. Prebid.js

Prebid.js is an open-source header bidding solution that employs bid caching only under specific conditions.  It re-considers bids only if:

  • The ad unit is the same
  • The user is on the same page view
  • A certain Time-to-Live (TTL) has not expired, or the bid has not won and been displayed
  • If the user refreshes the page, bids will be lost.

The bid adapters set the TTL in milliseconds, and caching is automatic for display and native ad units. However, for video ads, caching needs to be set manually.

Transparency and Disclosure in Bid Caching

While some instances of bid caching may be acceptable, transparency and disclosure are crucial in ensuring buyers and sellers understand how the practice is used. 

Ad tech vendors must be transparent about their agreements and inner workings, and publishers should always ask questions before partnering with any third-party vendor.

What Can Publishers Do?

As a publisher, it’s important to be aware of the impact of bid caching on your ad inventory and user experience. Here are some tips for navigating this controversial practice:

Understand your ad tech partners: Before partnering with any third-party vendor, ask questions about their bid caching practices and how they ensure transparency and fairness for buyers and sellers.

Opt-out if possible: If you’re uncomfortable with bid caching, check if your ad monetization partner offers an opt-out option. This may not be possible in all cases, but it’s worth exploring.

Monitor user experience: While bid caching can improve page load times, monitoring the impact on user experience is important. Ensure your ads are still relevant and non-intrusive and don’t negatively impact page load times or create latency issues.

Consider alternative solutions: If bid caching isn’t working for you, consider alternative solutions such as ad refresh or pre-loading. These can also help improve page load times and increase ad viewability without the concerns around bid caching.

Bringing It All Together

In conclusion, bid caching has been a controversial ad tech topic with advantages and challenges. 

For publishers, bid caching can help improve page load times and reduce latency, while for buyers, it can lead to concerns about targeting, brand safety, and overvaluing impressions. 

Ad tech vendors are also responsible for transparency and disclosing their inner workings to avoid misunderstandings or debates.

Looking ahead, the future of bid caching in ad tech remains uncertain. While it has shown potential benefits, concerns, and debates may continue to arise around transparency and fairness in the ad tech ecosystem. 

As the industry evolves, publishers and other stakeholders must stay informed and adapt to new developments to stay ahead of the curve.

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