What is Header Bidding?

An AdTeach Programmatic Essentials Series

Written by Ben Morrisroe

15 Sep, 2020

Get ready for a deep dive into header bidding. It has become THE buzz word in the ad tech world and for good reason! Read on to come out on the other side as Header Bidding pros, ready to boost your ad revenues.

What is Header Bidding?

Header bidding, also known as advance bidding or pre-bidding, is an advanced programmatic technique where publishers offer inventory to multiple ad exchanges at the same time before making calls to their ad servers (mostly DoubleClick for Publishers). By letting multiple demand sources bid on the same ad inventory at the same time, publishers increase their yield and make more money.

It's a way for publishers to simultaneously offer ad space out to numerous SSPs or ad exchanges all at one time. It also gives publishers significantly more control over the process, including who they sell it to.

The Waterfall Method and Real Time Bidding

Before programmatic header bidding was introduced, ad space was auctioned off and delivered only once the ad placements began to load on a webpage - this is called real time bidding, or the "waterfall system". When a person visited a website, the publisher’s direct orders would be served first, as they sat at the highest priority in the ad server. Once the frequency cap on this direct order was exhausted, the ad server would pass the impression down to the programmatic line items in a sequential “waterfall system”, a real-time auction environment.

The main issue with this is the price your impression sells for doesn’t necessarily reflect its real value. Unsold inventory is offered to the top-ranked ad exchange, normally determined by size, rather than to the highest bidder. If no one in this group goes for it, it's passed down to the second tier and so on until someone bids for it. There may be someone in the next tier down who was ready to pay a higher price, but they never got the chance to bid for the inventory they wanted, leaving revenue on the table for publishers.

Waterfall system in programmatic advertising

Waterfall

How Does Header Bidding Work?

Header bidding begins as soon as the page begins to load within the user’s browser. The header bidding code in the page header executes and calls all demand partners like Rubicon, AppNexus, and Pubmatic simultaneously to bid on this impression before calling the ad servers. All within a specific time frame picked by the publisher, often within a second.

The highest bid values from each partner is then passed from the visitor’s browser to the publisher’s ad server before its own direct inventory is called. 

Publishers can control which sources have the ability to participate in the process and, more importantly, publishers can increase the prices they charge for their premium inventory. Publift has seen publishers increase their revenue by an average of 70% when implementing header bidding within our Fuse platform.

With less reliance on a single ssp, overall yield also increases, with an increased ad fill rate and smarter allocation of impressions sold to the highest bidder. Reporting discrepancies are also reduced as it's a single auction with no sequential chaining.

Why is Header Bidding Better For Publishers?

Here are plenty of reasons why to enable header bidding on your site:

  • Increases competition for your inventory. Through header bidding, you can make your inventory available to more advertisers, which will drive higher CPMs and revenue growth.
  • Allows more advertisers to bid for impressions. You can expand and diversify the advertisers interested in buying impressions on your site. Not being reliant on a small set of advertisers will increase business resilience and allow you to adapt to any circumstance.
  • Increases ad quality. The increased competition will result in higher quality, more relevant ads, as advertisers with higher affinity with your audience will bid higher to get their ads in front of your users.
  • Faster loading times. Header bidding decreases time needed to sell an impression and render an ad on page, which will improve user experience and SEO results.

How Does Header Bidding Help Advertisers?

Here are three great reasons advertisers should consider:

  • All advertisers now have a great shot at winning the best inventory regardless of whether they use adx or not.
  • Provides better transparency, increased reach to find your target audience and opportunity to win bids on premium inventory. Advertisers are now able to access all of the publisher’s inventory, including premium inventory that was previously only available through direct deals with publishers.
  • Programmatic ad buyers now get a real look at all of a publisher’s impressions, not just those that went unsold in the waterfall setup.

What is a Header Bidding Wrapper?

A wrapper, A.K.A a container/framework, organizes all buyers and sets the rules for the programmatic auction. It means publishers can maximise the number of demand sources competing for an impression in an auction without the added complexity of added code with each new bidding partner.

All partners using header bidding have their bid requests triggered at the exact same time. Wrappers also have a timeout setting to manage how long the browser waits to respond before the auction closes out. Moreover, the software comes with a suite of analytic tools to determine what methods are working best and what partners might be dropped from the wrapper. If a particular demand source is not winning any impressions, they can be easily removed from the header bidding process.

Why Header Bidding is Better Than AdSense

Upgrading to header bidding from Adsense is like swimming in a small pool versus swimming in the ocean. While Adsense is one of the options you can integrate into your header bidding, this system can dramatically expand the range of publishers and ad exchanges that can bid on your inventory.

Google’s overall market share continues to fall as other advertising partners become increasingly competitive, as much as a 10% drop YoY according to eMarketer. The increased usage of header bidding in publishers' sites is driving this change, as it's more transparent and more advertiser spend is flowing through private marketplaces.

Header Bidding vs Open Bidding

Pros of Header bidding:

  • Retaining greater control over their ad ops.
  • Greater transparency. In contrast, with EBDA, publishers can’t determine with certainty why a specific advertiser won the auction as the dynamic allocation process is a data black box.
  • Higher match rate with target audience. Cookie syncing allows for the exchange of data and matching the user with a profile on the buyer’s database. This process allows advertisers to find and bid for ad impressions for their target audience.

Pros of Open bidding:

  • Overall reduced latency as the auction takes place on an ad server in the cloud rather than in the user’s browser.
  • More simplified setup and interface managed by Google.

Client Side vs Server-side Header Bidding

If many advertisers are connecting to the header bidder wrapper directly, it runs a lot of JavaScript on the page, increasing the latency of page and ad load times. Everyone bidding will also have different response times, so the whole auction can only move as fast as the slowest bidder.

Publishers can try to limit the number of demand sources that can bid in a header bidding process in the first place, but this goes against the big benefit of header bidding. The whole point is having more people participating in auctions to drive up the price before calling the publisher's dvead server.

Google’s AdX and server-side bidding, in general, tackle the latency problem by hosting the auction process in the cloud in an external server. Publishers still need to add a snippet of code to their site, but rather than sending the bid requests from the user’s browser, they are sent from the ad server to all relevant supply-side platforms (SSPs).

Publift's implementation is client-side, to take advantage of higher cookie-match rates, higher CPM rates, increased transparency, better-targeted ads and an overall higher fill rate.

SO, IT’S A WIN-WIN ALL AROUND

Header bidding has been a huge programmatic technological breakthrough in the ad ops space. It has opened up the ad buying process helping publishers to have more control, greater transparency, and higher revenue from their ad inventory.

Advertisers also benefit from header bidding as they now have more access to and visibility of a publisher’s entire ad inventory, allowing them to bid on premium inventory that was previously only available through direct sales. 

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