2025 hindsight: Hmm - pretty poor on both form and content I think. This must have been in the runup to the Jedi Blue deal. In my head I remembered it being more pro-Google, but it seems fairly neutral on that score.
Imagine an antiques shop.
Let’s call it ‘Google Antiques’.
It sells antique furniture on behalf of its sellers with slow, loving salescraft as it has done for many years. Sellers drop off their goods, label them with what they think the items are worth, and leave them in the care of the shopkeepers to sell.
But Google Antiques is an antiques shop with a secret. Out the back it runs an auction house. Let’s call it ‘Googlebys’. If something doesn’t sell in the shop for the labelled price, the shopkeepers take it to the auction house to see what they can get for it there.
In the early days only the less attractive antiques went to auction, but then shoppers learned that they could sometimes buy good stuff there at a decent price (if they were willing to put up with the hassle of bidding). And of course the more that buyers bought in the auction rather than the shop, the more shopkeepers found themselves selling good stock there, and the more the sellers started to put lower sticker prices on their stock, in the hope of making money at auction.
Lovely bit of Chippendale
But Googlebys wasn’t the only auction house in town. There were many others like AppNexhams and OpenChristies, each with lots of buyers clamouring for a bit of Chippendale, but they didn’t have the advantage of being linked to Google Antiques. The only way they could get their hands on the goods was through a complicated rule Google Antiques had to follow.
This rule stated that the other auction houses, could get the armoire or chaise longue to sell, but only if the average price that they had paid in previous auctions was higher than the actual price bid in Googlebys. One more time: the average price that the other auction house sold stuff for, had to be higher than Googlebys best price for the item in question. So when it was a good piece of furniture, Googlebys got to sell it at a good price, and only when it wasn’t so attractive did AppNexhams get the chance to sell it, further depressing its average price and making it less likely to get more stock in future.
So the other auction houses were struggling to get enough furniture to satisfy their buyers. True they had some sellers bringing them pieces directly, but it was never enough, Google Antiques being such a well established business.
In desperation the other auction houses came up with a clever idea. They made a deal with the sellers delivery drivers, who were backing their lorries of furniture up to the loading bay of Google Antiques. The deal was that the delivery driver would let them take a photo of the stuff in the lorry, and wait a little while for them to come back before they started unloading.
Auction Trouble
The other auction houses then took those photos back to the buyers at their own auction houses, got them to bid, then ran all the way back to the loading bay to give the lorry driver a sticker with their best price on the furniture as it was being loaded into the shop, with a note of the name of their auction house. The driver would look through all the stickers from all the auction houses, pick the one with the highest price and stick it on the furniture.
The auction houses had to do it bloody quickly of course; even quicker than their usual auctions, but when it worked this meant that Google Antiques had to beat the best sticker price or be compelled to ship the furniture out to the competing auction house which had found a buyer. Because Googlebys had to compare its prices to the strongest offer from the other auction houses, rather than the average offers of each of them, it didn’t win as often, and the other auction houses got a chance to compete. When they won, the other auction houses paid the money they got from the buyer direct to the seller, which was nice because the sellers got to see who was really auctioning their stuff.
Google Antiques
Google Antiques didn’t like this much, so they decided to try something else. ‘OK,’ they said to the other auction houses, ‘we will make a little vestibule for you between Google Antiques and Googlebys. You can sit there and we will let you inspect the furniture as it passes though. It’ll be more comfortable for you than hanging about in the loading bay, and you can give us a sticker with your best price. Then we’ll have a look at all the stickers, and if Googlebys can’t beat it, we promise we will send it to the winning auction house.’
‘But we don’t want to clutter up our lovely shop, so you can’t go tramping round asking your buyers what price they will actually bid; you just have to put a price on the sticker that you think they will pay. And to keep things simple, we will handle payment as well. So you give us the money from your buyer and we will give it to the seller of the furniture because, after all they brought it to us, not you.'
And while the other auction houses are grumbling about this, the legendary uptown furniture auction, Facekea has been getting curious about all these stickers. For years they have exclusively made and auctioned their own furniture. But they can only make so much furniture themselves in any given month, so they have decided to get into the antiques business as well, auctioning other people’s furniture as well as their own.
Now Facekea don’t just want to sell any old antiques - they like to choose things with the same aesthetic as their own stuff - but they are struggling to get hold of enough stuff to satisfy the demands of their buyers. So they are wondering whether to do the same deal with the delivery drivers that the other auction houses have. They can skim off stuff that looks like their own furniture, put a decent sticker price on it, and sell it in their own auction house for good money.
Conclusion
And that, dear readers, is the story of header bidding so far. To cash in the metaphor for more technical readers, Google Antiques is DFP and Googlebys is AdX. The lorry driver is a header bidding wrapper like prebid.js, and the little vestibule is Google’s EBDA: ‘Exchange Bidding for Dynamic Allocation’.
And in case you thought that last bit was fanciful, Facekea is definitely experimenting with a lorry driver deal. If they go ahead with it, everyone will suddenly realise that they’ve been in the same business as the auction houses all along. It was just the fact they were mainly auctioning their own furniture (and furniture from InstaBarrel) that distracted everyone from the truth.