What is Header Bidding and Why Should You Care?

Ben Morrisroe
December 16, 2020

Get ready for a deep dive into header bidding. It has become THE buzzword in the ad tech world and for good reason! Read on to come out on the other side as Header Bidding pros, ready to boost your ad revenues.

What is Header Bidding?

Header bidding, also known as pre-bid, is an advanced programmatic technique where publishers offer inventory to multiple ad exchanges at the same time before making calls to their ad servers (mostly DoubleClick for Publishers). The idea is by letting multiple demand sources bid on the same ad inventory at the same time, publishers increase their yield and make more money. And who doesn’t want more money?

It is a way for publishers to simultaneously offer ad space out to numerous SSPs or Ad Exchanges all at one time. It also gives publishers a lot more control over the process, including who they sell it to.

What Came Before Header Bidding?

Before programmatic header bidding was introduced, ad space was auctioned off and delivered only once the ad placements began to load on a webpage.

When a person visited a website, the publisher’s direct orders would be served first, because they sat at the highest priority in the ad server. Once the frequency cap on the direct order is exhausted, the ad server will pass the impression down to the programmatic line items in a sequential “waterfall system”, a real-time auction environment.

The main issue with the waterfall or daisy-chain system is the price your impression sells for doesn’t necessarily reflect its real value. Unsold inventory is offered to the top-ranked ad exchange, normally determined by size, rather than to the highest bidder. If no one in this group goes for it, it is passed down to the second tier and so on until someone bids for it.

There may be someone in the next tier down who was ready to pay a higher price, but they never got the chance to bid for the inventory they wanted, leaving revenue on the table for the publisher.

The waterfall method before header bidding
The Waterfall method that came before header bidding

How Does Header Bidding Work?

Header bidding begins as soon as the page begins to load within the user’s browser. The header bidding code in the page header executes and calls all demand partners like Rubicon, AppNexus, and Pubmatic simultaneously to bid on this impression before calling the ad servers. All within a specific time frame picked by the publisher, often within a second.

During this split-second window, many of these demand partners are holding their own auctions to determine the top bid they send. The highest bid values from each partner are then passed from the visitor’s browser to the publisher’s ad server before its own direct inventory is called.

Header bidding means that all the demand sources are participating in the auction at the same time and publishers can control which sources have the ability to participate in the process. 

Most importantly for publishers, they can increase the prices they are charging for their premium inventory. Publift has seen publishers increase their revenue by an average of 70% when implementing header bidding within our Fuse platform.

With less reliance on a single SSP, overall yield also increases, with an increased ad fill rate and a smarter allocation of impressions sold to the highest bidder.

Reporting discrepancies are also reduced as it is a single auction with no sequential chaining.

How header bidding works
How header bidding works

Why Header Bidding is Better for Publishers

The biggest benefit header bidding offers publishers is greater yield. Since header bidding allows publishers to have a simultaneous auction from all the bidders, publishers can sell inventory on a per-impression basis. Less reliance on a single SSP allows for a smarter allocation of impressions and increased fill rate.

But that’s not the only reason header bidding is best for publishers.

Here are 5 key reasons publishers should enable header bidding on their sites:

  1. Increased control. Publishers can control which sources have the ability to participate in the bidding process. In addition to retaining control over their sites, publishers can prioritize certain advertisers, encouraging marketers to continue working with their favorite publishers.
  2. Allows more advertisers to bid for impressions. Publishers can expand and diversify the advertisers interested in buying impressions on their sites. Not being reliant on a small set of advertisers increases business resilience and adaptability.
  3. Increased revenue. Publishers can make their inventory available to more advertisers, which drives higher CPMs and revenue growth. Through header bidding, Publift has been able to increase their publishers’ revenue by 30-40%.
  4. Increased ad quality. Advertisers with an affinity for a certain publisher’s audience will bid higher to get their ads in front of those users. The increased competition results in higher quality and more relevant ads.
  5. Faster loading times. Header bidding decreases time needed to sell an impression and render an ad on page, which improves user experience and SEO results.

How Does Header Bidding Help Advertisers?

Advertisers also benefit from the implementation of header bidding. In addition to the opportunity to win bids on premium inventory, header bidding provides advertisers with an increased reach to find their target audience.

Here are 3 key ways advertisers benefit from header bidding:

  1. Disintermediation. All advertisers have equal access to the best inventory regardless of whether they use AdX or not.
  2. Transparency. With header bidding, programmatic ad buyers now get a real look at all of a publisher’s impressions, not just those that went unsold in the waterfall setup. Advertisers get publisher data directly from the source and can make more informed decisions about their ad strategy.
  3. Better inventory. Advertisers can access all of the publisher’s inventory, including premium inventory that was previously only available through direct deals with publishers.

What Are Header Bidding Wrappers?

A wrapper, A.K.A a container or framework, organizes all buyers and sets the rules for the programmatic auction. It means publishers can maximize the number of demand sources competing for an impression in an auction without the added complexity of added code with each new bidding partner.

All partners using header bidding have their bid requests triggered at the exact same time. Wrappers also have a timeout setting to manage how long the browser waits to respond before the auction closes out. 

Moreover, the software comes with a suite of analytic tools to determine what methods are working best and what partners might be dropped from the wrapper. If a particular demand source is not winning any impressions, they can be easily removed from the header bidding process.

What is prebid.js?

One of the most popular wrappers is prebid.js. 

Designed by AppNexus in 2015, prebid.js is an open-source project under the Apache License embraced by the Rubicon project as well in 2017. Prebid.js allows publishers to set up line items and handle asynchronous, multiple ads calls with an ad server.

Pros and cons of prebid.js

Pros:

  • Sophisticated tools for ad server communications
  • Publishers have generally noted an increase in speeds while running bidding header style auctions compared to the waterfall model
  • Open-source and free
  • Large, robust user community which contributes upgrades to the code, and also acts as a support group

Cons:

  • Not exactly user-friendly. It is complex to set up and maintain the header bid wrapper.
  • Running the header bid wrapper itself can slow site loading speed as there is inherent overhead with its use.
  • There are a number of forums where anyone can get expert assistance from a large, professional group of users and developers. While support is available from the user community, it is not on-demand like paid support.

As can be seen, the pros far outweigh the cons. However, that does not change the fact that prebid.js will require an expert to set up and run. So, while it has many advantages, it won't work for every person in every situation. 

In the interim, it should be noted that this is hardly the only wrapper available. Amazon supports its own Transparent Ad Marketplace (TAM) software and Google maintains its Exchange Bidding in Dynamic Allocation (EDMA) tool.

Open Bidding: Google’s Answer to Header Bidding

Header bidding was put in place to add more competition to Google’s AdX which was able to preview auctions and win impressions they valued by bidding 1 cent more than the winning price. Google has now been given less control over the process, with all demand partners bidding on the impression simultaneously.

Google has since offered its product, Open Bidding (formerly known as Exchange Bidding or EBDA), as a possible alternative. Open Bidding relies on server-to-server connections, which are faster than the page tags header bidding relies on which decreases page latency, thus increasing ad viewability and yield. This means the auction takes place on the ad server and not on the user’s browser.

Publift has partnered with Google to bring Open Bidding to more than 50 publishers in Australia and New Zealand which needed a more simplified setup with less management and a unified billing system.

The results were:

  • Less time involved in management, which could be directed to other tasks, like analysis and optimization.
  • Increased site speed.
  • A boost in revenue thanks to a 40% increase in CPM rates, which also allowed publishers to overcome seasonal drops in revenue after the Christmas season.

Why Header Bidding is Better than AdSense

Upgrading to header bidding from AdSense is like swimming on a small pool vs swimming in the ocean. While AdSense is one of the options you can integrate into your header bidding, this system allows you to dramatically expand the range of publishers and ad exchanges that can bid on your inventory.

Google’s overall market share continues to fall as other advertising partners become increasingly competitive, as much as a 10% drop YoY. The increased usage of header bidding in publishers' sites is driving this change, as it's more transparent. Another factor is more advertiser spend is flowing through private marketplaces (PMPs).

What are the pros and cons of header bidding vs open bidding (EBDA)?

Header bidding requires a more complex setup than Open Bidding, which is managed by Google and has a more simplified interface. But with header bidding publishers are able to retain more control over their ad ops.

Open Bidding also has an overall reduced latency over header bidding, as the auction takes place on an ad server in the cloud rather than in the user’s browser.

Open Bidding is less transparent than header bidding, as publishers can’t determine with certainty why a specific advertiser won the auction. There is a dynamic allocation process which is sort of like a data black box.

On the other hand, header bidding can have a higher match rate for cookies than Open Bidding. Cookie syncing allows for the exchange of data and to match the user with a profile on the buyer’s database. This process allows advertisers to find and bid for ad impressions for their target audience.

Client Side vs Server Side Header Bidding

If a lot of advertisers are connecting to the header bidder wrapper directly, it runs a lot of JavaScript on the page, increasing the latency of page and ad load times. Everyone bidding will also have different response times, so the whole auction can only move as fast as the slowest bidder.

Publishers can try to limit the number of demand sources that can bid in a header bidding process in the first place, but this goes against the big benefit of header bidding. The whole point is having more people participating in auctions to drive up the price before calling the publisher's ad server.

Google’s AdX and server-side bidding, in general, tackle the latency problem by hosting the auction process in the cloud in an external server. Publishers still need to add a snippet of code to their site, but rather than sending the bid requests from the user’s browser, they are sent from the ad server to all relevant supply-side platforms (SSPs).

Publift's implementation is client-side, to take advantage of higher cookie-match rates, higher CPM rates, increased transparency, better-targeted ads and an overall higher fill rate.

So, it’s a win-win all around

Header bidding has been a huge programmatic technological breakthrough in the ad ops space. It has opened up the ad buying process helping publishers to have more control, more transparency, and higher revenue from their ad inventory.

Advertisers also benefit from header bidding as they now have more access and visibility of a publisher’s entire ad inventory, allowing them to bid on premium inventory that was previously only available through direct sales.


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