A few years ago, header bidding emerged as the buzzword in digital marketing spheres. However, many digital publishers still aren’t fully aware of what header bidding is or how it could help their business. A July 2018 poll conducted by mobile ad network InMobi found that 31% of app publishers in North America said they have a limited understanding of header bidding technology.
But before we dive into header bidding, we need to have an understanding of a time before it existed. Before header bidding publishers used the waterfall approach to manage their ad partners.
What is waterfalling?
Waterfalling is a technique publishers use to maximize both the pricing and sell-through rate of their inventory. It’s also often called “daisy chaining.
How does it work?
Publishers started doing it in an effort to make the most money for the unsold inventory they put on ad networks, which varied in both their specialties and pay rate. Publishers, trying to squeeze as much revenue out of each impression, worked with the networks that offered the highest rates first, before working with those that offered lower rates until they monetized every impression. Hence, “waterfalling.”
This restricts the publishers from maximizing the value of ad impressions which leads to unrealized revenue potential.
Header bidding was developed as an alternative to the waterfall model. It allows simultaneous bidding which results in higher revenue for publishers while also giving all advertisers an equal shot at higher quality placements.
Header bidding is an advanced method of programmatic ad buying. It allows publishers to increase their revenue by simultaneously collecting multiple bids for their ad inventory from a variety of demand sources (e.g. demand-side platforms [DSPs] and ad networks) each time a new impression is available.
When a user clicks through to a website, the publisher’s header tag requests several ad networks. The ad networks place their bids, and then, the winning bid is passed to the publisher’s ad server. Finally, the publisher’s ad server connects the user to the advertiser’s server, which shows the winning ad creative.
Header bidding flattens the waterfall and ensures that the value of ad impressions is maximized which translates to higher revenues for publishers.
1. Select a header bidding wrapper
Managing header bidding partners manually can get tedious which is why you will need the header bidding container or wrapper.
Header bidding wrappers manage multiple header bidding partners, adding or removing them as necessary. They communicate unique partner parameters to the ad servers and enforce ground rules for the auctions.
There are several containers out there, but the one which really stands out as the best solution is Prebid.js. It is an open source, free of charge, and has the widest range of supported bidders. Others that are available are openx, adbutler, pubmatic and many more.
2. Pick header bidding partners
Having strong header bidding partners is key to maximizing revenue through header bidding. You should have at least 2-3 bidders to provide enough competition.
Extensive research must go into finding the best partners in your niche and location. Partners can include popular ad exchanges like AppNexus, Index, and Rubicon.
3. Test and go
After the system is in place A/B testing with bidders can be conducted to optimize the right number of bidding partners, price adjustments and response time. Once the model is tested and you know what works best for your inventory, you are good to go live.
While we have tried to cover the basics here, to dive into the details of header bidding implementation check out this elaborate guide to header bidding by Adprofs (a valued ad tech industry resource).