Header bidding decoded!

Our vocabulary doesn’t seem to stay stagnant for long in the AdTech ecosystem’s never-ending talk soup. Header bidding is one of the most used buzzwords these days. In this episode of our Back to Basics series, we’ll explain what Digital header bidding is and why it’s essential to pay attention to it. Sabarish Pillai working as an Associate Director for Programmatic digital eco-system will help us to decode the Header Bidding concept. Right from basic to benefits. He has more than a decade of experience in the Digital technology space with expertise in Programmatic advertising.

What is Header Bidding?

Header bidding is an advanced programmatic advertising technique that serves as an alternative to the Google “waterfall” method. Header bidding, also known as advance bidding or pre-bidding, allows publishers to simultaneously offer ad space to many SSPs or Ad Exchanges at the same time.

When a publisher tries to sell ad space on their website, the process for filling inventory typically proceeds like this:

Your website first contacts your ad server. Direct-sold inventory, in general, takes precedence over programmatically sold options. Next, available inventory is served in a waterfall sequence through the site’s ad server, such as Google DoubleClick. This means that unsold inventory is offered first to the top-ranked ad exchange, and then to the second ad exchange, and so on. These rankings are normally based on size, although the biggest ones aren’t always the ones who are willing to spend the most. (For publishers, this means lower overall revenue if the inventory isn’t automatically going to the highest bidder.)

To further complicate the process, sites using Google’s DFP for Publishers has a setting that enables them to outbid the highest bidder by a penny using Google Ad Exchange (AdX). And since AdX gets the last bid, they are generally in a position to win most of these auctions. Publishers end up feeling like they aren’t making quite as much money as they would without Google meddling in the bids.

What are the main differences between client & server-side tech?

“The industry is very much in experimentation mode,”. “The fundamental difference between these two technologies is the location of the software or code that controls the header bidding auction logic.”

Client-side

1. In client-side header bidding, the auction code lives on the publisher’s page and is executed on the user’s browser as they visit the website. So, all the logic to request and receive bids and then pick a winner is happening on the users browser.
2. js, an open source solution, is the most popular client-side wrapper and many exchanges/SSPs have built their own version on top of the open source code.

Server-side

1. With server-side header bidding, all of the auction software and logic is executed on a standalone “auction” server. Therefore, the user’s browser makes a single request to the auction server and the server takes care of sending and receiving bid requests and picking a winner.
2. Vendors of server-side integrations include Google Ad Manager (formerly EBDA), Amazon TAM, and Prebid Server.

What are the Benefits of Header Bidding for Publishers?

Instead of the sequential technique used by Google, header bidding allows publishers to have a simultaneous auction from all bidders. When a page is launched, the ad server calls all supported SSPs or ad exchanges for bids before calling its own direct-sold inventory. Publishers have the option of allowing the winning offer to compete with direct sales pricing.

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

1. Maximum control: Header bidding means that all demand sources are bidding at the same time, and publishers can choose which sources can participate in the bidding. They have complete control over their websites. Publishers can even take this control a step further by prioritising specific advertisers in the auction, which may incentivize marketers to stick with their preferred publishers.
2. Increased Revenue: Publishers can raise the prices they charge for premium inventory, which will increase revenue. With header bidding, some publishers have seen a 30-50 percent increase in revenue.
3. Higher Yield: By reducing reliance on a single SSP, total yield rises, allowing for better impression allocation and a higher fill rate.
4. 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.

What are the Benefits of Header Bidding for Advertisers?

1. Disintermediation – Regardless of whether or not they use AdX, all advertisers have a good chance of winning the best inventory. Everyone has the same opportunity!
2. Transparency and Better Inventory – Advertisers who use header bidding get access to all of the publisher’s inventory, allowing them to see what’s available and at what price. If advertisers really want that premium inventory, they can bid high enough.

The Case Against Header Bidding

1. Increased Latency: Google has been outspoken against header bidding recently, saying that this process causes latency on sites that use it. On the contrary, many publisher platforms have actually cited a decrease in latency for sites using header bidding compared to the waterfall sequence of Google.
2. More Work for the Publisher: For some publishers, ad ops teams may be hesitant to adopt header bidding as it requires changing code on their site.
3. Increased Infrastructure Costs: Another potential drawback of header bidding would be the possible increased infrastructure cost for SSPs/DSPs, as it puts more load on their server simply because they now possibly can see the same impression twice.

Header bidding has emerged as an intriguing method in the never-ending hunt for greater transparency and control over data and ad impressions. While it remains a contentious practise, many publishers have begun to embrace it because of the potential for higher revenue and yield. What does header-future bidding’s hold? Only time will tell, but we hope this clarifies some of the ambiguity surrounding its benefits.