Blog

Header Bidding 101 – The Whats, Hows, and Whys of Header Bidding

Introduction

Digital marketing and advertising have been a welcome revolution. It began to challenge the popular marketing techniques and beliefs. Since its conception and implementation, many marketers have begun to understand the advantages that it brings to the table. While some aspects of digital marketing were clearly an improvement over the traditional advertising methods, many marketers were still skeptical about it and continued to look at it from afar. Who can blame them; the digital marketing ecospace was constantly expanding to accommodate new and developing technology.

In this scheme of things, came Header Bidding. Header Bidding is the most commonly used word in the world of programmatic buying and selling. Since its inception, industry leaders believed it to be the next big programmatic trend. As of May 2018, nearly 75% of U.S.’s top 1,000 publishers had implemented Header Bidding solutions on their websites for increased monetization.

There are many articles out there defining and detailing the advantages of Header Bidding. The question is, do you really understand all that is written? Header Bidding has more advantages than one can fathom. Do we have proof you ask? We wouldn’t be discussing this if we didn’t already know, would we [wink, wink]? But before we do, let us discuss what Header Bidding is and why we need it.

What is Header Bidding?

Header Bidding, also known as pre-bidding or advance bidding, is a process of filling the ad spaces on a publisher’s website through the use of auction-based programmatic systems that send out bid offers to multiple demand sources simultaneously before a call is made to their ad servers. By pitting several ad space buyers against one another, this system creates competition to serve advertisements to the publisher’s website visitors, with premium and most relevant advertisements being cherry-picked by the publisher’s website.

In the initial days of Programmatic advertising, the bidding system worked on a Waterfall model. Waterfall or Daisy Chain model is one in which the bidding process happens in a sequential rather than a simultaneous manner. When a publisher’s website is opened by a user, usually the direct-sold ads, which are the ads negotiated by the publisher’s sales team directly with the advertisers, are served first. If there is further unsold inventory, a call is made to the Publisher’s ad server (DoubleClick for Publishers or DFP in most cases) and the process of Real-Time Bidding (RTB) begins.  

In the RTB process, the ad server tries to bid through ad exchanges in order to fill the unsold inventory. The order in which the ad exchanges are called is defined based on a priority value stored in the ad server. When the inventory is not filled by the first ad exchange in the priority list, a call is made to the next ad exchange and so on, until the publisher’s inventory is filled.

The disadvantages of this process are:

  1. There is latency introduced by the Waterfall model due to multiple calls made sequentially to ad exchanges, until such point that all of the publisher’s inventory is filled. This process can involve up to 5 ad exchanges before the inventory is finally sold.
  2. With each call to a new ad exchange, the quality of the ad inventory served as well as the cost reduces. Consequently, the revenue generated by the publishers takes a hit.
  3. Since most of the publishers use DFP, Google takes the liberty to serve up advertisements from its ad exchange called Google AdX on a priority basis while the other ad exchanges fall behind in the Daisy Chain.

In order to overcome these shortcomings, Header Bidding was born.

How does Header Bidding Work?

Header Bidding, as the name indicates, is the process of bidding facilitated by a small piece of Javascript code placed on the publisher’s website header. This code allows demand sourced to bid before the final call to the ad server to serve up the ad image. The image below shows how Header Bidding works.

How It Works:

  1. Configure GPT tags in BidAmp
  2. BidAmp tag fires request to Datawrkz (DW) server
  3. DW server responds with GPT and SSP/Exchange configurations
  4. BidAmp sends ad requests to all SSPs / Exchanges asynchronously
  5. BidAmp considers responses from all SSPs/Exchanges received within a timeout period
  6. BidAmp passes the best bid on the GPT tag to DFP
  7. Ad request is sent to DFP via GPT tag with the best bid details
  8. BidAmp bid competes with other network line items & AdX on price priority in DFP
  9. If BidAmp has the highest bid, BidAmp creative is served

Advantages of Header Bidding

Header Bidding is more than a mere improvement over the traditional Waterfall model. Here are the clear advantages of using Heading Bidding:

  1. Increased Revenue: Being a simultaneous bidding process, Header Bidding allows multiple ad exchanges to compete for the ad space on the publisher’s website. As a result, the best and the highest bidding ad gets served. Additionally, Header Bidding removes the biggest middleman – Google. As a result, every demand source has an equal chance to compete for the ad space. We have observed a 20-50% increase in revenues with our proprietary Header Bidding wrapper.

  2. Improved Yield: Improved, increased yield is probably the biggest advantage of employing Header Bidding. Header Bidding results in an increased fill rate as well as a smarter allocation of impressions. Sources indicate that by adding a single Header Bidding wrapper can increase yield by roughly 10%. We have personally observed a 20-25% increase in yield with our proprietary header Bidding Solution – BidAmp

  3. Reduced Latency: Because Header Bidding happens simultaneously, it reduces latency to a large extent as compared to the Waterfall model.

  4. Transparency: Header Bidding introduces transparency into the bidding system. Because the bidding is now a simultaneous instead of a sequential process, there is single auction happening across multiple demand sources. Therefore, it reduces reporting discrepancy induced by the Waterfall model. Moreover, the publishers can now sell their inventory on a per-impression basis, meaning greater insights into the actual worth of their impressions.

  5. Increased Control: Header bidding means all the demand sources are bidding at the same time, and publishers can control which sources have the ability to participate in the bidding process. They retain control over their sites. And publishers can take this control one step further to prioritize certain advertisers in the auction, which could encourage marketers to continue to work with their favorite publishers.


Areas of Concern

When choosing between the traditional Waterfall model and the improved Header Bidding solutions, Header Bidding emerges as a clear winner. But, it is not without its flaws. Header Bidding requires every SSP to add a tag to the header of the publisher’s website. These Client-side Header Bidding wrappers are used along with various third-party tags already on the website. This can increase the page load-times and it is recommended that publishers limit the number of SSP tags on their website, but that defeats the purpose of having an open bidding platform.

Header Bidding requires some changes to publisher’s code and some publishers see that as a challenge. In some cases, it also involves an increase in the infrastructure cost for Supply- and Demand-Side Platforms (SSPs and DSPs).

These are but a few concerns which are being addressed as we write. Server-side Header Bidding is a solution to the latency problem posed by Client-side Header Bidding. In this method of bidding, the actual bidding process happens on an external server. Although publishers are required to embed code snippet on their sites, the requests are sent from an ad server to the relevant SSPs.

Conclusion

Header Bidding is not a new concept anymore. Many publishers have implemented it and found a solution to many of their problems. It is definitely a welcome change and efforts are underway to make it better. Header Bidding is constantly evolving to address its various shortcomings and expand its reach to various channels as well.

Many believe that In-app and Video Header Bidding will be the future of Header Bidding. Over 1/3rd of the mobile publishers agree that In-app Header Bidding has solved the problems from the Waterfall method. In a survey, a good percentage (40%) of publishers indicated they had moderate to no understanding of the working of In-App Header Bidding. Furthermore, this limited understanding dissuaded 31% of the publishers from implementing it but 36% of those who use In-app Header Bidding observed increased revenues and provided greater transparency.

Given the right platform and enough support, we are sure that more and more publishers will adopt and implement Header Bidding solutions.

Leave a comment

Data-Driven Digital Agency and Independent Trading Desk