‘Header Bidding’ has been a buzzword in AdTech for a reason. Publishers, regardless of geography, size, and traffic have implemented header bidding and seen an increased Ad revenue and demand for their remnant inventories.
So, What is Header Bidding and Why You Should Care?
Header Bidding increases your Ad revenue by opening up your inventory to more demand sources, before placing an ad call to your Google DFP (now Google Ad Manager) server. It is a way for publishers to conduct direct auctions, so as to bypass the inefficiencies that keep websites from finding the best prices for their ad space inventory.
What are the Inefficiencies?
I. Waterfall or Daisy Chaining
Let’s say you’re a publisher with ad space to sell on your website. So, here’s a summary of what normally takes place in milliseconds:
Your site reaches out to its ad server to get an ad. Usually, these direct-sold ads — the ones negotiated by the site’s own sales team — are served up first to the available ad space. After all, these are the clients the site’s salespeople have handled.
Now, the rest of the site’s ad space is made available through an ad server — often Google’s DoubleClick for Publishers (DFP) — in what’s known as a “waterfall” sequence.
It’s called so because the unsold inventory is first offered to the top-ranked ad exchange (based on historical data, not real-time performance), and then if it remains unsold, it goes to the second-ranked and so on.
A key factor in the current inefficiency is how these “demand sources” are ranked, which determines the order in which they are offered the unsold inventory. They are generally ranked according to such factors as their buying volume, so the biggest buyer goes first, then the second-biggest and so on.
But the biggest buyers aren’t necessarily the ones that will pay the highest for that ad space. They’re just first in line.
II. Google AdX Privilege
And then there’s the Google factor.
Many of the site publishers utilizing Google’s DFP ad server employ a setting that allows its Ad Exchange (AdX) to outbid any of the winning waterfall bidders because AdX gets to do the last bid. This is supposed to maximize yield, but it also puts AdX in a privileged position.
Google will wait to receive the bids from other exchanges and gets the ‘last-look’. Then, it’ll try to outbid the exchanges. For instance, if Google exchange has two bids $4 and $5, it can choose to submit a $5 bid based on the bid prices from other bidder partners (so that it could win the auction).
So you can see why site publishers might feel they’re not getting what their ad space is worth. When they utilize waterfall bidding, and when they employ Google’s ecosystem, they might not be receiving the highest price they could.
This arrangement, Index Exchange vice president Steve Sullivan told me, is “meddling with the demand.” It also meddles with the data, he said, because you can’t really tell what your ad inventory is worth.
How does Header Bidding Remedy This?
Header bidding is a way for the website to directly solicit an essentially simultaneous auction from all the bidders.
If they want, publishers can also allow the winning bid to compete with the prices available from the direct-sold ads.
Advertisers get a shot at the best ad inventory. And this process avoids AdX’s last bid, thus getting around Google’s domination of the ad-buying chain and giving the publisher more flexibility.
Not least, it can also lead to higher rates. Index Exchange’s Sullivan says header bidding can produce “up to a 30 percent lift in rates” for some publishers. SSP PubMatic told me that it has seen publisher gains as high as 50 percent in CPMs.
How to Setup Header Bidding?
Although header bidding is a proven technique to increase your Ad revenue, you have to follow certain practices. In fact, improper implementation might result in poor user experience and revenue drop.
So, while deploying header bidding consider the following factors.
It is important to have strong demand partners to reap the benefits of header bidding. As a publisher, your initial step is to partner with SSPs and any demand partners to have several advertisers bid on your inventory.
Also, it is integral to have the ideal number of demand partners. Higher the number makes the page to load slowly as the browser has to receive more bids.
As you know, in header bidding, the browser makes the call to the demand partners and wait for them to make their bids. This also results in increased page load time. To avoid latency issues and the resulting poor user experience, you can set a universal time out using wrappers. I.e, how long should the browser wait to receive the bids.
With the use of wrapper, you can also make the header bidding ‘asynchronous’. This will not make the content to halt and wait for the ad. The page content will load independently and you can deliver the ad to the user a bit later.
Need to learn more about header bidding and how can you optimize it based on bidder partners, timeout rate, and win rate – Feel free to follow the “Decode Series” where we elucidate the details of header bidding.