What Marketers Need to Know About Header Bidding

Header bidding is a hot topic in ad tech. As of November, 53% of large publishers were using the technique. It’s no wonder why: By one estimate, header ad rates beat standard waterfall rates by 166% in open exchanges.

The issue has caught the attention of Google, which opened DoubleClick for Publishers to let outside bidders vie with the publisher’s network of buyers. Some believe that may spell the end of the practice.

While header bidding is clearly good for publishers, the benefit for advertisers isn’t as clear. Major issues such as transparency and lack of standardization make it hard for advertisers (and demand side platforms) to get an accurate read on opportunities. The situation will likely be sorted out over the next year, but in the meantime, marketers should arm themselves with facts on the technology.

What Header Bidding Is — And Why You Should Care

Header bidding is getting attention lately, with many supply-side platforms (SSPs) adopting it in the last year, but the practice isn’t new.

Here’s a simple definition: header bidding is a programmatic technique in which publishers offer inventory to multiple buyers before hitting the publisher’s ad server. To participate, supply-side platforms (SSPs) and demand partners develop a custom line of code placed on the header of publisher pages. This direct page implementation enables demand sources to simultaneously bid on that impression before it hits the publisher ad server.

Previously, publishers relied on the waterfall, which auctioned ads based on publisher determined prioritization. With header bidding, every ad opportunity can be thrown out to network buys and SSPs. The highest bid then gets submitted to the publisher ad server. That said, header bidding isn’t a replacement for the waterfall. It’s another way to help publishers maximize yield and opportunity.

For buyers there’s potential that header bidding could provide transparency similar to that afforded through direct sold inventory. However, unless there’s visibility and access to the full transaction process (ad server, supply/publisher, DSP and demand), this level of transparency generally won’t be available.

Header Bidding Issues

Header bidding solves a problem for publishers, but introduces opacity for the demand side (the buyers and their buying partners) in terms of optimization, effective bidding and performance attribution. In other words, it’s harder for advertisers to take advantage of inventory appropriately.

For instance, I can bid on an impression, but that doesn’t mean I am eligible to purchase that impression. A publisher can decide for whatever reason that it doesn’t want to accept the bid. As a bidder, I’m not privy to the reasoning behind that decision.

As a result, I could be eligible to compete with higher priority positions within the publisher ad server one day but the next hour or minute, the publisher can drop me in priority and my eligibility to bid on those impressions is no longer there.

Another issue is the inability to effectively optimize header impressions. Today, there are no standardized identifiers signaling demand sources that impressions are from header implementations.

The Necessary Fixes

There are a two ways that the current system could be improved: standardization and transparency. Joe Laszlo, VP of industry initiatives at the IAB, recently said the organization is looking into a standard for signifiers within a bid request.

Header bidding solutions from third parties are all based on proprietary technology. Some are interested in introducing their own custom signifiers, but that approach isn’t scalable when you’re operating in an ecosystem with more than 35 global exchanges and SSPs. With standardized technology, buyers can optimize impressions appropriately and capitalize on those opportunities.

Beyond standardization, I’d like to see an ecosystem in which publishers and suppliers tell us where we sit within the publisher ad server. If it dynamically changes, fine. Publishers should have control. But advertisers should also have more clarity so they can bid appropriately on supply.

Addressing those issues should help make the process more scalable and efficient. However, header bidding will still require further development for buyers to extract its full potential. As of today, header bidding should be viewed as an option for additional access to supply, but not an anchor to a buyer’s strategy.

[A similar version of this post appeared in MediaPost.]

About Amobee

Founded in 2005, Amobee is an advertising platform that understands how people consume content. Our goal is to optimize outcomes for advertisers and media companies, while providing a better consumer experience. Through our platform, we help customers further their audience development, optimize their cross channel performance across all TV, connected TV, and digital media, and drive new customer growth through detailed analytics and reporting. Amobee is a wholly owned subsidiary of Tremor International, a collection of brands built to unite creativity, data and technology across the open internet.

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