What Is Header Bidding, How Does It Work And Who Benefits?
Header bidding has become an increasingly hot topic in programmatic video advertising, and you don’t have to go far to see it pop up at speaker sessions or dominating headlines in trade magazines.
As more and more platforms develop header bidding solutions, programmatic buyers and publishers are quickly familiarising themselves with the ins and outs of how the technology actually works.
But despite these good intentions, header bidding is undoubtedly a subject that still causes confusion – probably thanks to the extensive list of jargon and acronyms attached to the process.
So, to help, we’ve put together a breakdown of what exactly header bidding is, how it works, and who it benefits.
What is header bidding?
Let’s start with the basics – header bidding is a programmatic technique that allows publishers to offer their inventory to multiple ad exchanges at the same time, before making ad calls to their servers.
This is the opposite of what happens when a publisher sets up a waterfall, which involves a chain of ad networks each being offered the same impression in turn. The problem with waterfalling is that if a bid later in the queue is higher than the accepted one, publishers lose out on revenue and fail to maximise the value of each impression.
Header bidding, on the other hand, is designed to flatten the waterfall hierarchy. The ad call is sent out simultaneously to all bidders in an auction and the highest bidder wins.
This means that publishers can access more demand and increase their fill rates, while buyers can access more inventory and unlock more chances to reach their target audience.
Wait, what is waterfalling?
Waterfalling is a technique where publishers try to maximise revenue by passing on unwanted, available ad inventory to other buyers in a queue. If a buyer doesn’t show any interest, it moves on to another, and so on… in a “waterfall” of potential buyers.
Traditionally, the buyers being waterfalled were ad networks, but today it’s more common for SSPs to be waterfalled by publishers.
Header bidding technology explained
The process goes like this: when a user visits a web page, the header tag connects the user to multiple ad networks (exchanges, SSPs, DSPs). The ad networks place their bids, and the winning bid is returned to the user, who passes the bid to the publisher’s ad server.
The publisher’s ad server then redirects the user to the advertiser’s server, which returns the final creative. All of this happens within a few fractions of a second.
What are the benefits of header bidding for publishers?
1. Increased choice of demand
Header bidding allows publishers to integrate with multiple demand partners and SSPs more quickly and easily – increasing the range and variety of demand available to them.
2. Transparency on what was bid
Header bidding provides increased transparency into how much impressions are worth, as publishers can sell their inventory on a per-impression basis. Overall, it allows for more control and more bid transparency for reporting and optimisation.
3. Eliminates ‘passback’
Header bidding eliminates the need for pushing inventory back and forth, which happens in a waterfall when there is no bid and can be ineffective and wasteful.
4. Better yield management & revenue increase
By letting multiple bidders bid simultaneously on the same inventory, publishers increase their yield and their revenue. Essentially, header bidding allows publishers to sell their inventory to the highest bidder and provides total visibility and control of who won each impression.
What are the benefits of header bidding for buyers?
1. Access to more inventory
Header bidding code enables buyers to see a publisher’s entire inventory, providing a better understanding of their reach. It also allows buyers to access more audiences and gives them a greater chance of delivering their campaigns – as bid requests can be generated for every available impression.
In addition to this, being able to see the full breadth of inventory means better insight into different audiences and more data for advertisers and DSPs.
2. Forecasting avails
This one’s fairly simple – more consistent inventory over time means better and more accurate forecasting for campaigns and media planners.
Open-source header bidding at Unruly
Unruly and AppNexus recently launched the first open-source header bidding solution for outstream video, through the open-source library and community prebid.js.
The solution enables publishers to auction outstream video inventory across both desktop and mobile, optimising revenue through direct transactions with premium demand partners in a transparent auction.
What do we mean by open source? Well, in a nutshell, open source means the technology can be modified to fit the needs of each publisher and the vendors they work with. This is in contrast to a closed source solution, where the tech is locked down and there is no customisation available.
An open source solution benefits both publishers, who want more control over who is bidding on their inventory, and advertisers, who want to engage audiences across trusted and brand safe media environments.
Feeling confident about header bidding?