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What is Header Bidding?

What is Header Bidding?

Header bidding is an advanced programmatic advertising technique that serves as an alternative to the Google “waterfall” method. Header bidding is also sometimes referred to as advance bidding or pre-bidding, and offers publishers a way to simultaneously offer ad space out to numerous SSPs or Ad Exchanges at once.

Real-time bidding and the waterfall

Real-time bidding (RTB) is the process of auctioning off ad space in real time. To maximize their revenue during an RTB auction, publishers offer their ad space to the highest bidders in a cascading fashion. After direct deals are filled, unfilled inventory is offered to bidders one ad exchange at a time. In the first exchange, if nobody bids over the publisher’s price floor, inventory is sent the next network with a lower price floor, and then the next, until someone bids high enough or the publisher calls its ad server, like DoubleClick for Publishers. The system is called a waterfall. It works, but inefficiently.

How does header bidding work?

To work, header bidding hinges on a piece of JavaScript in the header of a publisher’s page that allows buyers to bid on advertising. It works like this: First, a user clicks through to a website. Then, the publisher’s header tag requests several ad networks. The ad networks place their bids, and then, the winning bid is passed to the publisher’s ad server:

Finally, the publisher’s ad server connects the user to the advertiser’s server, which shows the winning ad creative. Advertisers can win header bids for any inventory as long as their bids are high enough and they don’t interrupt the delivery of direct orders.

This method flattens the waterfall and lets publishers know exactly what each advertiser is willing to bid before the publisher calls its ad server. Ultimately, with header bidding, publishers can maximize revenue and advertisers cement better exposure for their brand.

Header bidding implementation

For publishers, implementing header bidding can be a complicated and counterintuitive process. The setup is tedious, forcing its adopters to develop countless line items for their ad inventory. The team at Ad Ops says “Header tag integrations require a much, much heavier upfront lift in terms of trafficking line items. It’s not just a little more work, it’s probably 100X as much work to traffic for most publishers.”

What’s more, even after setup, header bidding can kill page load speed. Third-party tags that enable header bidding, like any third-party tag, bog the page down. They make it load more slowly. And if visitors are abandoning your page before it loads, they’re not seeing any ads. Publishers are not earning revenue.

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How Does Header Bidding Help Publishers?

So what does this mean? There are a few benefits for publishers:

Increased Control: Header bidding means all the demand sources are bidding at the same time, and publishers can control which sources have the ability to participate in the bidding process. They retain control over their sites. And publishers can take this control one step further to prioritize certain advertisers in the auction, which could encourage marketers to continue to work with their favorite publishers.
Increased Revenue: More importantly for publishers, they can increase the prices they are charging for their premium inventory. Some publishers have increased revenue by 30-50% with header bidding.

Improved Yield: With less reliance on a single SSP, overall yield increases, by allowing for a smarter allocation of impressions and increased fill rate.

Reduced Reporting Discrepancies: As header bidding is a single auction happening across multiple partners simultaneously, there’s no sequential chaining, which drastically reduces reporting discrepancies. They will always exist, but this is one step forward to reducing them as much as possible.

How Does Header Bidding Help Advertisers?

Disintermediation: All advertisers have a great shot at winning the best inventory regardless of if they use AdX or not. Everyone has equal access!

Transparency and Better Inventory – Header bidding gives advertisers access to all the publisher’s inventory, so they know what’s available at what price. Advertisers can then bid high enough if they really want that premium inventory.

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