The term header bidding has been around for a few years now with Google Trends shows that the term sprung onto the scene in the summer of 2015, but only recently publishers have been using the technology as a serious piece of their ad tech stack.
With Digiday reporting that Sizmek found 60% of the top 30,000 websites are using header bidding vendor tags on their pages. The biggest benefit of header bidding is that it helps publishers get higher auction rates for their inventory with established publishers like The Telegraph claiming to have increased their programmatic revenues by 70% with their header bidding implementation.
Clearly there can be enormous revenue benefits for publishers to move away from the waterfall auction and into header bidding. Though as publishers embrace header bidding they’re finding the drawbacks of open source tech like Prebid and are moving to more sophisticated setups to battle page latency, brand safety, revenue discrepancy, etc.
For a publisher of that size and traffic to increase programmatic earnings by 70% is staggering! Although not every publisher might see such dramatic increases, a lift in earnings is imminent when implementing header bidding.
However, this technology is not without its challenges and as usual, many publishers struggle to understand the process, implementation and everything that goes with it. With so many companies offering header bidding services apart from the open source solutions available on the market, it is often hard to cut through all the noise.
Whether you’re an up and coming publisher trying to maximize your earnings or a premium publisher with millions of visitors, I want to explain header bidding to you from A to Z.
Let’s get started!
What is Header Bidding: Waterfall setup VS Header bidding
In simple terms, the definition for header bidding is: A programmatic technology publishers use to get the most out of their ad inventory and ensure that the highest paying bid is served.
Before header bidding was a staple to many publishers, most were utilizing the waterfall structure. With this approach, publishers would manage their demand partners by ordering them from highest to lowest paying. Waterfalling, however, comes with a few challenges that header bidding thankfully solves.
Issues with the traditional waterfall setup
Yield risk: With the traditional waterfall structure a publisher’s ad server picked which partner to serve the impression to based on their average historical yield. However, this variable is known to be a bad predictor of what an impression is worth. Platforms like Ad Exchange with its DFP connection that can bid impression by impression also gets an unfair advantage. It resulted in publishers managing their ad inventory not based on actual value, but an assumption what an impression was worth.
Fill risk: A publisher’s ad server would often decide to serve impressions to the exchange with the highest average rate, but sometimes the exchange couldn’t fill those impressions. It also requires the publisher to have a plan B in place if they want to sell the impression at all. The plan B could be to call out to another exchange or to pass back to their ad server for the second round of ad decisions where the whole process might repeat itself. Publishers need to know if they can fill their impressions before they call the exchanges which they can’t with the waterfall structure.
Pass back issues: Because of the complexity of waterfalling systems, publishers are faced with a challenging and time-intensive task of managing, optimizing and reporting. Typically they need an ad operations team with access to multiple platforms and a lot of time to handle the setup. In reality, publishers have to apply a lot of manual effort to a marketplace that is meant to be automated.
How header bidding solves waterfalling issues:
With header bidding, publishers have the option to move past all these waterfalling challenges and integrate with multiple programmatic companies.
To solve yield risk header bidding allows the publisher to understand the value of an impression in advance before making the ad serving decision. Publishers can know what each impression is worth to multiple exchanges at once instead of relying on an average rate that is unreliable. This means the highest paying bidder wins the auction and the publisher earns more.
With header bidding publisher can get a real bid value which also solves the issue of fill risk. The publisher has a bid, or it doesn’t and therefore knows whether the exchange will deliver a bid or not. Header bidding has an immediate revenue effect on the publisher because they understand what the market will pay without losing any impressions.
Here’s our video describing this process in more detail below:
How does header bidding work?
An example would be as follows: A visitor visits Forbes.com, and within a few milliseconds the header bidding code gets executed, makes a call to the demand partners the publisher is signed up with (AppNexus, etc.) and gets them to place a bid. The winning bid is decided between all the available demand partners, and the highest bidding is selected.
That information is passed directly to the publisher’s ad server. Within the ad server, based on how the publisher has set up their system, header bidding partners will compete against all other demand sources. Once the overall highest bid is selected the ad gets displayed on the publisher’s website, and the publisher enjoys the maximum yield for their website impressions.
Head over to PubGuru.com for a detailed explainer video on how header bidding works.
Benefits of using header bidding
Header bidding is beneficial for both publishers and buyers/advertisers with the focus being on publishers. Some of the benefits for publishers include:
Increased competition: Advertisers/demand partners can bid on every impression on the website increasing competition and giving them access to higher quality premium ad inventories. The increased competition also means an increase in bid prices and higher earnings for publishers.
More demand partners: With header bidding, publishers can integrate and get access to advertisers from multiple demand sources, similar to the point mentioned above, and most of the time results in a higher yield.
Increased transparency: Almost any business loves transparency, and that’s exactly what a publisher is. He/she is a person running an online advertising monetized business. With header bidding publishers are back in the driving seat with control to optimize their ad stacks a lot better than with traditional setups. Bid transparency is possible since publishers can sell ad inventory on an impression basis and see how much they were worth.
No more need for passback: A publisher does not need to push inventory back and forth as with traditional waterfall setups. It decreases the wastefulness of lost impressions and reduces latency.
Although less than for publishers, buyers/advertiser also can take advantage of a header bidding auction. The benefits to them include:
Increased inventory access: Buyers can now via header bidding get access to all of the publisher’s ad inventory. This means the potential for accessing more audiences and with that reaching their campaign goals exist. It also means that there is more data available for DSPs which can further be used to improve advertising campaign results.
Improved forecasting: It’s great to be able to generate accurate forecasts. With header bidding, better forecasting is imminent for buyers since they have access to more constant inventory over longer periods of time.
What are header bidding wrappers?
Originally big industry names like Amazon, Criteo and a few other opened the market to header bidding with their header bidding products. Similar to what is needed today, a publisher would implement the code in the header, connect to DFP and benefit from the increase in ad revenues. The issue with this approach was however that most of these solutions only allowed one source of demand for the publisher.
To increase competition within demand partners a publisher typically needed to set up multiple header bidding solutions to run more demand sources. This meant more work in DFP with new creatives, line items and so forth needing the be created and managed. It was also a very cumbersome process for publishers, which many could not afford to implement and as you can imagine, the effects on website speed weren’t all that great either.
Header bidding wrappers were introduced to solve this issue. With wrappers, a publisher can integrate multiple demand sources within the head of their web page. No more additional individual setups were needed which saves the publisher a lot of effort, time and money. Using the combined header code publishers can run multiple header bidding partners simultaneously and fully enjoy the benefits that go with it such as mentioned in the benefits section above. With wrappers, the issue of site speed also should get solved. Currently, there are multiple header bidding wrappers available on the market with a mix of ad tech company developed and open source solutions.
Open source solutions include the likes of Prebid.js and PubFood.js, while ad tech company developed solutions include MonetizeMore’s very own PubGuru and much more. Although the process a publisher understands is fairly simple you still need a skilled in-house team or ad tech company to help with the implementation and monthly upkeep.
Here’s an article from MonetizePros.com that will help you decide which wrapper is best for your publisher business: The Ultimate Guide to Header Bidding Wrappers
How to implement header bidding
This will be a short introductory overview of the process of implementation since it can be somewhat technical. For implementation advice about your specific setup and needs, I urge you to get in touch with our team here.
For header bidding to work, you need demand sources to compete against each other and open up your inventory to more buyers. It is fundamental to build and have solid partnerships with the likes of SPPs or Exchanges. The list of available demand partners are long and can include companies like AppNexus, Rubicon, Criteo, Amazon and more.
Timeouts need to be managed by publishers since multiple RTB auctions are taking place all at once for all the demand sources to produce their highest bid for the impression at hand. This takes time and can increase latency. Overall it’s recommended keeping timeout durations within 500 milliseconds. Publishers need to make sure that a demand source or multiple sources aren’t delaying the header bidding auction and decreasing page load times.
Ad server configuration is also a very important step and as you can imagine your ad server, whether it’s DFP or something else, needs to be configured to support your header bidding solution.
For a detailed breakdown of how to implement header bidding, we put together this page explaining the benefits of Prebid’s open-source technology.
Google header bidding AKA Exchange Bidding
You might ask where does Google fit in all this? Well, Google has been testing and developing their solution or competing product you might call it towards header bidding. It’s called Exchange Bidding, and according to Martechtoday.com, this product has recently been opened to publishers, currently in Beta, via DFP.
Many premium publishers, totaling more than 100, including the likes of Zillow, MailOnline and more have been testing Exchange Bidding while exchanges such as OpenX also are participating and competing against DFP and Ad Exchange campaigns via a unified auction process.
Instead of being set up on the publisher’s website and running in the header code like header bidding, exchange bidding runs on the server side which comes with many benefits. These include much fewer implementation complexities and time needed, faster page loading/less latency and it also helps keep billing and reporting all in one location.
Google reported that those within the program have been seeing generous overall lifts in revenue and increased bidding times.
Since header bidding is such a hot topic within the programmatic community right now, Adexchanger also chimed in on the Google Header Bidding topic concluding that publishers should test Exchange bidding and header bidding, compare results and gain as much benefit from each solution. Such is their recommendation, at least for the time being.
Within their community of contacts, Adexchanger also reported that publishers agreed that Exchange bidding was a breeze to set up with the process taking less than 24 hours to implement where some, and keep in mind some not all, header bidding solutions are way more complicated and labor intensive.
Earlier I mentioned that the industry standard for header bidding is 500 milliseconds. Google claims to have brought their Exchange bidding process down to 60 milliseconds, however, not all publishers were experiencing these times on a consistent basis.
Apart from implementation and speed, the yield is, of course, a crucial factor for publishers. As mentioned Google indicated that its publishers in the beta program saw an increase in revenues. Adexchanger reported that results for publishers did vary, but that there was an additional list of money saving factors to using Exchange Bidding as well.
Keep in mind that Google will ask a percentage based fee for using Exchange Bidding and that their product is far from perfect at the moment. Even though Google’s Exchange Bidding is a nice addition to the market, it has not yet surpassed header bidding and might not for a while. However, within the programmatic industry, it’s always good to keep an eye out for developments and changes that can benefit you and your business.
Header Bidding trends for 2019 and beyond
Let’s take a quick look at some of the forecasts for header bidding in 2017 and the years to come.
Header Bidding and video combine: Video continues to grow at an exponential rate as a platform and via demand from users. Many publishers want to stake their claim with video; hence video header bidding is something to keep an eye on. However, this is not without its challenges. Not only does video act differently (no header code), but the video advertising landscape is different compared to display advertising. There is still a lot of disagreeing opinions about the use of video header bidding and what the effects would be, but potentially as with traditional header bidding it could help publishers gain back inventory control and increase their yield.
Getting better at header bidding optimization: Since the words “header bidding” is on almost every serious publisher’s lips demand partners are joining the landscape and trying to integrate themselves left and right. You might think that this is all good. However, publishers need to be cautious and ask the right questions when adding new demand partners. Publishers will need to get extremely good at weeding out the bad from the good, or else overall performance will suffer.
Server to Server: As with most ad tech developments the evolving of that technology is imminent. As with Google’s Exchange Bidding, many believe that the next step for header bidding is to move the technology to the server to server side. This means implementation takes place on a publisher’s ad server which comes with a whole range of benefits including easier partner integration, better page load speeds, and more efficient bidding.
How to check if a publisher has implemented header bidding?
Have you ever wondered if one of your competitors have implemented header bidding or not? With this neat little extension called the Headerbid Expert from AppNexus you can easily understand what your competitors are doing.
It’s very easy to setup and use. For help with the installation check out MonetizeMore’s guide on How to Use the Headerbid Expert Chrome Tool.
What the tool does is show you which demand sources are competing via header bidding on a web page, the latency of each one of those sources and more. Here’s a screenshot from a page on The Telegraph.
MonetizeMore Pubguru Header Bidding
Since MonetizeMore is a leader within the publisher monetization field, we have been developing and implementing header bidding for our publisher clients for close to 3 years. Our Header Bidding product that was formerly called MonetizeMore Demand has now evolved into an advanced header bidding wrapper platform called PubGuru.
With our Pubguru Header Bidding Platform, we’ve developed and integrated a range of ad optimization tech and tools while remaining transparent to our publishers. Here’s our product video explaining how simple it is to implement PubGuru on your website.
The PubGuru setup comes with a whole list of benefits such as:
- Being able to track performance and revenues via a single interface
- Free to join and implement
- 24/7 support for our dedicated group of skilled ad ops employees
- Bid scaling being supported with automated bid scaling in development
- Optimization of header bidding via bid scaling, frequency capping, viewability scaling
- 100% Transparency for publishers
- And much more
Find out more about MonetizeMore’s PubGuru header bidding platform here.
It’s safe to say that header bidding is here to stay. Sure there might be some confusion and a certain level of expertise involved to manage and implement it, but that’s all part of the programmatic industry. With header bidding processes continuing to develop and improve as well as the added pressure from sources like Google things can only get better for publishers moving forward. If you’d like to partner with MonetizeMore and let us help you realize your ad inventory’s full potential take a look at our premium publisher program here.