Header Bidding: A Win-Win deal in the Programmatic Ecosystem
What is Header Bidding?
Header bidding, also known as pre-bidding or advance bidding, is a smart advertising technique that allows publishers to display and offer their ad inventories to multiple SSP’s, ad exchanges and ad networks at the same time. Multiple advertising demand sources can bid for ad space on the publisher’s website simultaneously through this technique. The demand source with the highest bid is sold the inventory, eventually. Since this technique allows the publishers to maximize their revenues by achieving the highest bid for their inventories, while also exposing the advertisers to the premium inventory that they are looking for, we call this a win-win deal in the programmatic ecosystem.
Header bidding has been in place since 2014 to tackle the drawbacks arising from the waterfall approach. This approach passed on ad impressions to ad exchanges based on the rank achieved by each of them. Thus, if an ad exchange at a lower rank desired ad space, then even by bidding a greater amount, it wouldn’t stand a chance if the inventory was sold beforehand to an exchange that ranked at the top. Moreover, when talking about Google’s ad server, it usually favoured its in-house exchanges which limited the publisher’s revenue and inventory access to the advertisers. It was in June 2015 when an article on header bidding (External link: https://www.adexchanger.com/publishers/the-rise-of-header-bidding-and-the-end-of-the-publisher-waterfall/) by Ad Exchanger led to the widespread adoption of this term.
How does Header Bidding work?
Benefits of Header Bidding to publishers
1. Revenue growth: The primary benefit of header bidding is the ability to reap greater revenue as compared to the waterfall technique. Each publisher can sell the inventory in its possession at premium auction rates irrespective of the ranking of different ad exchanges / SSP’s. Various publishers have reported revenue growth of around 50-70% using this technique.
2. Better control: Eliminating the restrictions on the ad exchanges that can participate in the bidding process, header bidding allows publishers to exercise better control over the kind of ad networks and SSP’s to be picked for the process. This also enables every publisher to add quality demand partners to its header bidding process thereby downgrading the risk of fraudulent partners.
3. Varied networking: Since multiple advertisers are a part of the header bidding process, the publishers have an opportunity to network and engage with a variety of advertisers and accordingly filter those who provide a greater yield. An increase in competition from various advertisers also leads to higher CPM’s which drastically boost the revenue for publishers.
4. Ease of management: Using a header bidding wrapper that receives bids from different demand partners for every impression, the publisher can facilitate better management of the bidding process.
Benefits of Header Bidding to advertisers
1. Transparency: Through header bidding, advertisers can get access to the entire inventory possessed by the publishers. It provides knowledge about the price of different inventories which helps the advertisers decide if they want to bid on the same.
2. Open access: Header bidding eliminates access denial based on the ranking of ad exchanges. Every advertiser can be a part of the bidding process irrespective of the ad exchange they belong to.
Header Bidding V/S Waterfall Bidding
Under waterfall bidding, the ad impressions were passed to different ad exchanges in a sequential order determined by their respective ranks. Thus, a top-ranked ad exchange would receive the impression earlier than the rest. In case the top-ranked ad network declines the bid, only then, an SSP in the lower rank would get an opportunity to bid. Thus, no matter what amount you bid for the inventory, if you are at a lower position, you are at a disadvantage.
In contrast to the former technique, header bidding allows multiple SSP’s to simultaneously bid on the inventory, irrespective of the size of the networks. The highest bidder is declared the winner of the auction. There is an equal opportunity for all the advertisers to be a part of the bidding process, thereby leading to the promotion of healthy competition.
