I get a lot of questions from clients and partners about header bidding: What is it? Are we doing it? What value does it add?
To summarize: Header bidding is enabled when a publisher places code, provided in most cases by a supply-side partner (SSP), in the page header. This code activates a request for bids from all demand-side platforms (DSP) before calling the publisher’s ad server. Think about it as a “pre-auction.”
This implementation, and some of the philosophy behind it, are all in response to inefficiencies in the way that sell-side decisions occur in most publisher ad-serving systems. But we have some work to do to realize the full potential.
Core benefit: Header bidding creates a more unified auction for each impression, through which direct demand competes more readily alongside auction-based demand. The theory being: more competition is better for everyone.
What is the waterfall?: Sell-side decisions are typically made in sequence: Do this, then do that. This is the “waterfall.” Header bidding increases competition for each impression, opening up a more effective avenue for auction-based bids to participate higher up in the food chain.
· Depending on the publisher’s implementation, programmatic buyers can effectively climb to the top of the waterfall and compete alongside direct demand with their auction-based bids.
· Moves industry towards unified auction.
· Improves buyers’ ability to forecast available inventory.
· Enables buyers to compete for every single impression.
· For sellers, header bidding leads to increased competition for sellers, improving yield.
· Publishers benefit from higher CPMS, advertisers gain access to more inventory.
· Because it’s up to the publisher to implement, an early argument against header bidding was that it was too complex to code and keep organized.
· Header bidding wrappers quickly emerged to help publishers standardize, reduce the workload on a publisher’s ad ops team, and bring SSPs more easily into the fold as a partner.
· On the buy side is that there is no differentiation between header-enabled requests and open-market requests. The lack of a signal to the buyer creates challenges for DSPs to effectively value those impressions.
As always, the marketplace will likely course-correct, as the aforementioned challenges continue and as new roadblocks emerge. Header bidding is the first step toward the preferred end state of programmatic advertising: a fully transparent marketplace where buyers have access to all classes of supply, sellers are able to maximize yield, and everyone gets to truly compete for each impression. Although other speed bumps will likely develop, the bulk of ad placements will eventually transact through auctions.