Getting ahead of header bidding

WaterfallHeader bidding is set to become one of the most talked about topics in digital marketing and advertising in 2016. By allowing publishers to offer inventory to multiple ad exchanges simultaneously – before making calls to their ad servers – the technology tackles the two biggest problems associated with the publisher waterfall: latency and lack of transparency.

The perceived complexity of the technology has left it inaccessible for many marketers; so here is our guide to understanding the process.

What is header bidding?
The publisher waterfall – where impressions are exposed to markets in descending order of the perceived value of each market – is a process of selling inventory programmatically, that is in urgent need of upgrade. The technique artificially caps a publisher’s potential revenue by reducing competition and limits available inventory to advertisers.

Header bidding has been hailed as the answer to the inefficiencies associated with the publisher waterfall, by enabling publishers to receive higher revenue for their inventory.

How does it work?
Header bidding is quite simply the process of offering inventory to multiple ad exchanges before the primary ad server runs, effectively exposing inventory to as many demand sources as possible.

To enable header bidding, publishers insert a code onto their page header to allow demand sources to bid for the inventory before an ad server is called. This creates an auction where demand sources compete simultaneously, instead of sequentially. It requires significant investment, practical skills, and technical knowledge to set up header tag integrations but this short-term investment will reap benefits in the longer term.

Why are marketers interested?
If publishers adopt header bidding, marketers benefit as it creates a transparent marketplace with a complete picture of all available inventory, whereas tag-based integrations present advertisers with a limited view of available inventory. The integration of header tags generates bid requests for each available impression, reducing latency.

Why are publishers interested?
In addition to boosting revenue, publishers no longer need to evaluate the order in which channels access inventory, and the irritating issue of passbacks – when an impression is redirected to an ad server for a higher bid, if the right price is not achieved – is removed. This ensures inventory is traded at a fairer price, and publishers do not risk an unsold impression as a consequence of the waterfall effect while also removing associated passback costs.

What implications will it have on the wider advertising industry?
Although programmatic advertising offers a world of benefits to marketers and publishers, it is not without its flaws. By creating a transparent and fair marketplace, header bidding will take the industry one step closer to ultimate efficiency.

In 2016, we expect to see the inefficient publisher waterfall eliminated and replaced with header bidding to become the standard integration utilised by publishers.

Lisa Menaldo is managing director UK at Sublime Skinz