Understanding Header Bidding: A Revolution in Programmatic Advertising

Understanding Header Bidding: A Revolution in Programmatic Advertising

In the fast-paced and dynamic world of digital advertising, header bidding is a technology that changed the game and transformed the way publishers monetize their websites. But what is it, and how is it done?

What is Header Bidding?

Essentially, header bidding is an aberration of the programmatic advertising technique that allows publishers to offer their complex ad inventory to multiple ad exchanges, supply-side platforms , demand-side platforms , and ad networks all at once . As opposed to the traditional waterfall strategy, which sells inventory one ad at a time to the highest bidder possible.

Mechanics of Header Bidding

The most common way header bidding works is by placing a piece of JavaScript code in the header section of a page. This code, which is referred to as the header bidding wrapper, establishes a communication channel between the publisher’s site and other demand partners.

The Header Bidding Wrapper

The wrapper is the central hub that receives ad requests from the publisher’s site and forwards bid requests to all its linked demand partners simultaneously. From there, the wrapper gathers all the replies, identifies the highest one and relays it to the ad server, which is Google Ad Manager.

The Header Bidding Adapter

Every demand partner comes with its adapter, a small Javascript code that facilitates the communication between the wrapper and the partner’s ad server. Specifically, the adapter translates the generic bid requests into the ad server’s specific format .

The Auction Process

when a user accesses a website, the header bidding process starts with the wrapper loading and sending out bid requests. The demand partners reply with their bids in the ad server whiting the bid to the ad server, which in turn shows the winning ad to the user. The whole process takes place in less than 100 milliseconds to ensure it does not impair the user experience.

Benefits of Header Bidding

The use of header bidding is advantageous compared to the conventional methods because of the following reasons:

  • Increased Revenue: Header bidding enables a publisher to generate as much revenue as possible because different demand sources are allowed to bid on the inventory independently.
  • Transparent: The source of demand willing to pay the highest amount for the publisher’s inventory is revealed.
  • Efficiency: The sequential waterfall process is no longer required, making the auction faster.

Best Practices for Implementing Header Bidding

Charge your header bidding set up for the maximum

Publishers can experiment with the header bidding set up to increase revenue. They can test floor prices, available ad slots, demand partner setup, etc. Nowadays, a lot of header bidding technologies are fully adjustable. Thus, extra effort can bring extra revenue.

The selection of the right header bidding partners

Choosing the right ad exchanges and demand-side platforms to participate in the header bidding process is crucial. The competition between bidders can benefit the publisher only in the case if they are reliable and honest in their bids.

Check the indicators

Monitor indicator like fill rate, eCPM, and a bid density on the server. They can help identify the imbalanced areas to correct them and increase revenue.

Header Bidding vs. Waterfalling

In comparison, while the new approach of header bidding is more transparent and potentially beneficial in terms of revenue, traditional waterfalling can still be relevant for some publishers with specific inventory combinations or technical restrictions.

The main advantages and drawbacks of each approach are: header bidding – increased competition and more revenue potential, but potentially problematic latency; waterfalling – more control over what ads to prioritize but more restricted access to demand.

First, the new approach of header bidding has, indeed, turned the tides of the programmatic advertising field. More publishers can now monetize their content in a way that is more convenient and transparent, and I am sure that with the development of this technology, we will see even more interesting solutions in this area soon.

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