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What Should I Know About Header Bidding?

Header bidding has been in the headlines nonstop in the past couple years. Header Bidding was introduced in early 2009, and as it stands in 2017, it is estimated that approx. 70% of publishers have adopted this technology. It makes sense that there are several myths surrounding its implementation. Let's discuss those myths and the pros and cons of header bidding. 

The Basics

Publishers add a piece of JavaScript code into the header of their webpages (hence the term ‘header’ bidding), allowing demand sources to submit bids before the ad server callout - the browser is running the auction. This process enables a single unified auction where demand sources compete side by side rather than sequentially. This, in turn, creates greater competition among ad buyers bidding against each other to serve ads to users on publishers’ sites. The winning bid then ‘competes’ with a direct campaign, and whichever has the higher price wins. 

Pros

More Revenue: Using the old way of just one pool of demand each time, lowers competition and CPMs. Pitting exchange bids against each other drives up the price. Enthusiasts claim that header bidding can increase rates for some publishers by up to 30%. And a few have even seen gains as high as 50% in CPMs. 

No more Passbacks: Header biding also provides additional benefits. With tag-basedtypical programmatic buys, when an impression fails to sell or reach the price minimum, it gets “passed back” to the publisher's ad server to be filled elsewhere. Each time this happens the publisher has to pay a fee to cover it. Since header bidding combines demand into a single auction, within the ad server itself, it eliminates passbacks, improving publisher margins.

Eliminating Google’s Advantage: Some also believe header bidding helps negate advantages afforded to Google via its popular ad-serving technology DoubleClick, which many online publishers use for placing advertising. Google also operates its own ad  exchange, AdX, which is closely integrated with DoubleClick. DoubleClick has a setting that allows AdX to outbid any of the winning waterfall bidders, because it gets the last bid. While this is supposed to maximize yields, it puts AdX in a privileged position. Header Bidding eliminates this advantage.

Per-Impression Basis: Tag-based sales are usually in bulk. Buyers can only "see" an impression when the publisher deems them eligible. By combining publisher inventory into a single server-side supply, header bidding increases the efficiency of the auction process by allowing buyers to compete for every single impression. This enables publishers to increase bidding competition on a per-impression basis, which increases their price and therefore overall advertising revenue.  It also gives publishers more transparency into how much their impressions are actually worth.

Cons

High latency/load time since the additional code is implemented at the header, which affects the user experience and viewability.

Implementation at the impression level is not easy.

The high yield is short term, since header bidding results in a lower-quality impression. This may then cause the advertiser to block publishers that are not performing for them.

Multiple header bidders lead to poor performance.

Data security needs to be addressed, as header bidders also load tracking pixels even if they don't win the bid.

Auction time on mobile devices is longer due to slower Internet speeds.

There is no standard defined yet.

Multiple line items have to be made in the publisher’s ad server mentioning the bid cost, i.e., the same will serve only if the demand is met​.

 

The Myth: "It Helps Serve Ads" 

Header bidding does not help in serving the ad, but only in deciding which ad will be served. The header bidding script only helps to pass the key value to the ad server on which the decision is made. This means that in the end, the ad server decides which ad will be served, and any comparison between different SSPs or between an SSP and a network or direct is made by the ad server.

 

The Myth 2: “It Affects Ad Quality”

There is a lot of confusion about the quality of ads delivered using header bidding. In fact, header bidding does not affect ad quality. It has no connection with the quality or with the source of the ad.

The typical precautions one takes against ads with malvertising and ads of low quality should be implemented as per usual. Header quality only affects pre-bidding and passing the bid value to the server so the relevant ad will appear on the site. The quality can be affected only if the source is known, which is not the case in header bidding. However, when the same impression is simultaneously available through multiple marketplaces, which is very likely to happen, buyers must be careful not to end up bidding against themselves for the same impression.