Header bidding allows the publisher to make the inventory available to multiple demand partners (ad networks, ad exchanges, and DSPs) at the same time. It’s a real-time bidding (RTB) process that ensures that every impression is sold to the highest bidder.
Header bidding was introduced as a successor to the publisher waterfall. The reason it’s called ‘header bidding’ is because the code that facilitates the auction is placed in the header section of the HTML source code of the publisher’s website.
In the waterfall setup, ad impressions were sold in bulk, with the unsold inventory moving from one ad network to the next in a sequential manner (hence ‘waterfall’). As a result, ad inventory was often undersold in the first few auctions, even as higher bids were waiting down the line.
Benefits of Header Bidding for Publishers
More demand sources: When compared with waterfall or passback setup, header bidding opens up a wider supply of buyers, many of whom may otherwise not be interested in picking scraps on the tail end of the auction. Be democratising the bidding process, header bidding allows publisher to work with more advertisers, both in terms of variety and number.
Greater fill rate and revenue: Greater number of advertisers participate in the auction automatically increases the chance of getting a better fill rate. Each impression is auctioned optimally by comparing bids from all the demand partners. This and the fact that more advertisers can participate in the bidding, increases the overall revenue for the publisher.
Transparency: Since inventory is sold on a per-impression basis in header bidding, publisher can keep track of the ad transactions data for each impression. Furthermore, the process makes it easier for publishers to confirm that an impression has been sold and the ad served.
Benefits of Header Bidding for Advertisers
Access premium inventory: Before header bidding, many publishers preferred to sell their premium inventories using private marketplace. Due to this, lower-quality inventory was available on the open market. However, header bidding changed that. Advertisers now have complete view of publishers’ inventories and can easily bid and secure their ad placements.
Better ad targeting and reach: With the help of bidding technology, advertisers have a better view of the ad inventory including the number of impression and demographics of the website visitors. Using this data, advertiser can work on their targeting strategy more efficiently. With header bidding, it has also become easier for buyers to reach their audience at scale.
Downsides of Header Bidding
If compared with waterfall structure, one may find many benefits of using the header bidding. Having said that, header bidding does have its drawbacks:
Requires technical knowledge: Header bidding code goes directly into the header section of webpage HTML code. From the creation of the code to implementing it properly, it requires technical knowledge and a fair number of engineering hours.
Increases page latency: The bidding starts as soon as a visitor launches a web page, even before the content loads. The process takes a fraction of a second, but it does increase latency. This is generally resolved by adding timeout settings or using server-to-server header bidding.
Security concerns: Pushing inventory on the open market can invite fraudsters. Data leak can be one of the major issues, allowing fraudsters to hack people’s personal accounts and devices.
There is no doubt that header bidding is an overall improvement over waterfall setup. Even though it is complicated to set up and increases page load time, header bidding is still being practised and offers greater yield.
In any case, the key desires remain the same: the publishers want control over their ad inventories, to increase the ad inventory revenue, and to figure out a way to reduce page latency. With those factore behind, one can say, header bidding is here to stay.