What you need to know about header bidding

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What is header bidding?

Header bidding[4] is a programmatic advertising[1] technique. It allows publishers to offer their inventory[12] to multiple ad exchanges simultaneously before sending requests to ad servers[5] (ie. Google Ad Manager[2]). 

Header bidding evolved from waterfall bidding. A popular, but inefficient form of auctioning ad space. In a waterfall auction, publishers offer their ad space from ad network[6] to ad network in a descending order[13] of importance. The ad space is no longer available once the bid is accepted. There is a major issue with this method. For instance, say one advertiser[7] is willing to pay more for a bid. But the bid goes to the advertiser placed above them in the waterfall auction. They lose before even seeing the inventory.

Header bidding sets an equal playing field. Everybody bids at the same time. It can earn more revenue while also giving advertisers an equal opportunity to bid on high-quality ad placements.

What is header bidding?-02

How does header bidding work?

It relies on a piece of Javascript in the head of a publisher[14]’s page. It runs a real-time auction and allows buyers to bid on advertising. All this happens in a matter of milliseconds for every ad space available. This is how it works:

  1. A user clicks to open a website. The publisher’s head tag requests several ad networks to bid on the ad slot to fill the available impression[8].
  2. The ad networks place their bids.
  3. The winning bid[9] is passed to the publisher’s ad server. 
  4. The publisher’s ad server connects the user to the advertiser’s server, which shows the winning ad creative[15]

What value does header bidding provide to publishers?

Header bidding can give publishers advantages over waterfall auctions, the biggest advantages include: 

Increased revenue – With less reliance on a single SSP[3], overall yield[16] and fill rates increase when publishers increase the prices for their premium inventory as there’s more competition between ad networks. 

Increased control  When various demand sources bid at the same time, publishers can control which sources have the ability to participate in the bidding process.

Reduced discrepancies[10]  Ad header bidding is a single auction across multiple partners simultaneously; there’s a high level of transparency[11] and no sequential chaining, which drastically reduces reporting discrepancies.

Terms
1. programmatic advertising. Programmatic advertising entails using machine learning and technology suites to buy and sell ad inventory with a data-driven process.
2. Google Ad Exchange ( Google Ad Manager ) Ad Exchange is often referred to as the premium version of AdSense, and also a Google-owned ad network of sorts. To join Ad Exchange, publishers need to meet specific requirements such as 500 000 minimum monthly traffic, be invited or join through a Google certified partner. Recently Google has rebranded this product, and it is now called Google Ad Manager.
3. Supply-Side Platform [SSP] ( SSP ) A technology platform that provides outsourced media selling and ad network management services for publishers. The business model resembles that of an ad network in that it aggregates ad inventory, however they serve publishers exclusively and do not provide services for advertisers (e.g., FreeWheel, SpotX).
4. Header bidding. Header bidding is an ad technology that allows publishers to earn to most ad revenue possible for their ad inventory by ensuring the highest bidding ad is served.
5. ad servers. The computer or group of computers responsible for the actual serving of creatives to websites, or for making decisions about what ads will serve. An ad server may also track clicks on ads and other data. Major publishers, networks and advertisers sometimes have their own ad servers. Well known ad servers include Google Ad Manager, Xandr, and OpenX.

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