The growing importance of header bidding in adtech

Ad revenue is one of the most valuable indicators of success for the advertising campaign. One concept that has great potential in terms of ad revenue is header bidding. This programmatic advertising technique revolutionizes how publishers and advertisers compete for ad placements. In this article, we will respond to the question on how does header bidding work. We will also explore its advantages over traditional waterfall auctions, as well as explore the projections for the future of header bidding. These insights will be useful to both publishers who need to optimize revenue and advertisers who seek better inventory access.

What is header bidding?

First, let’s get header bidding explained. Basically, it is an advanced advertising technique that allows publishers to offer their ad inventory to multiple demand sources simultaneously before calling their ad server. The traditional for programmatic advertising waterfall model involves sequential ad requests. Meanwhile, header bidding creates a competitive real-time auction where the highest bid wins. With this method, publishers can enhance transparency and boost their revenues. In addition, header bidding provides advertisers with better access to premium inventory. 

The trend of header bidding has become increasingly important in the domain of digital advertising because it ensures fair competition, transparent approaches, and improved operational efficiency. These benefits typically expand across the entire advertising ecosystem.

How does header bidding work?

In header bidding, a programmatic auction process is launched as soon as a webpage loads in a user's browser. The point is that a script in the page header triggers simultaneous bid requests to multiple demand partners. This allows them to compete for the impression before the ad server is called. This may sound like a time-consuming process. However, in reality, the entire workflow typically happens in under a second.

Each demand partner runs its own auction to determine the highest bid. This bit is sent back to the publisher's ad server. In this case, the highest-paying advertiser gets the placement, which ensures that the publishers get only the most profitable agreements.

In addition, header bidding gives publishers greater control over their ad inventory and pricing. Such a practice also allows publishers to reduce reliance on a single supply-side platform (SSP). Finally, header bidding involves accurate reporting as one of its core principles. The point is that such a process consolidates all bids into a single auction rather than a sequential waterfall process. As a result, discrepancies between platforms are minimized, which brings much-needed transparency in reporting.

Benefits of header bidding for publishers

We have already mentioned some critical advantages of header bidding. Overall, this practice creates a competitive auction process that leads to greater control, enhanced market competition, better quality of advertising, and other beneficial things. Let's discuss the major advantages of implementing header bidding for publishers in more detail.

Increased control

First of all, header bidding allows publishers to gain greater control over their inventory. With such an approach, publishers can decide which demand sources can participate. This flexibility ensures that only the most profitable advertisers and demand partners are included in the bidding process. Header bidding also allows publishers to prioritize certain advertisers. An excellent header bidding example is the process allowing publishers to focus on long-term partners or businesses that align with brand values.

Expanded advertiser pool

Simply put, with header bidding, more advertisers can bid. This approach allows publishers to attract a broader range of demand partners. As a result, the competition for ad inventory can be enhanced significantly. Such diversification makes businesses more resilient. By reducing dependence on a limited set of advertisers, publishers are better protected from market fluctuations and changes in ad budgets.

Increased revenue

Header bidding allows publishers to drive up competition, which, in turn, allows them to increase revenue. With the enhanced competition, publishers can achieve higher cost-per-thousand impressions (CPMs). With header bidding, advertisers can bid aggressively to secure premium placements. As a result, the cost of various ads from the inventory proves to be higher, enhancing the overall publishers' revenues.

Faster page load times

Another important benefit of header bidding is faster ad rendering times. Multiple bidders can submit their offers at once, and the entire auction process is more efficient, especially compared to sequential bidding.

A streamlined auction means ads are selected and displayed quicker, reducing delays and improving overall page speed. Faster loading of pages enhances user experience, which makes ads more in demand. This, in turn, can also lead to a recognizable profitability boost for publishers.

Benefits of header bidding for advertisers

Surely, publishers are not the only party benefiting from header bidding in advertising. This approach can also bring several notable advantages to advertisers. Let's take a closer look at this question.

Greater disintermediation

With header bidding, advertisers can reduce reliance on intermediaries, such as ad networks and resellers. This feature speeds up the entire advertising process, allowing advertisers to deliver the right ads to the right audience faster. In addition, this approach makes the entire advertising process more efficient. With more straightforward practices, marketers can get greater control and flexibility in business-critical workflows.

Enhanced transparency

Header bidding allows advertisers to get real-time visibility into auction dynamics. With such an approach, marketers see the bids of their competitors, which is very important for refining bidding strategies. As a result, advertisers can optimize ad spend and make more informed decisions to maximize their return on investment.

Improved targeting

Header bidding provides advertisers with access to a broader range of inventory. As a result, advertisers gain space for experimentation with different types of advertising content. This, in turn, can lead to more data insights related to user behavior, device type, and browser history. With such insights, advertisers can achieve more precise targeting and ensure that their ads reach the most relevant users at the right time.

Fairer pricing

Traditional waterfall auctions often give preferential treatment to specific ad exchanges. This can lead to inflated prices for advertisers. Meanwhile, header bidding makes all demand sources compete simultaneously. As a result, advertisers only pay a fair market price for impressions. Such an approach helps businesses reduce inefficiencies in ad spend. In addition, advertisers do not need to commit to specific ad exchanges in order to get more attractive prices.

How to set up header bidding

Now that we have described the main advantages of header bidding, let's proceed with some practical tips that will help publishers set up header bidding. This practice requires technical knowledge and careful integration between the ad manager, header bidding wrapper, and supply-side platform (SSP) adapters. This process requires a structured approach that ensures a seamless implementation for the maximized ad revenue. It may include many steps but may, basically, split into three major steps.

1. Identifying the right demand partners

At first, you need to select demand partners that align with your website's audience and content. Do not aim to seek cooperation with the most popular SSPs. Instead, focus on the relevance and quality of your potential partners. The key aspects to consider include:

• Compatibility of ad formats

• Bidder performance and fill rates, metrics in digital advertising that measure the percentage of ad requests that are successfully filled with an ad

• Alignment of your inventory with target audiences and their demands

• Technical support and reporting capabilities.

Partnerships with multiple high-quality bidders can help publishers increase competition for their inventory. This, in turn, leads to higher CPMS and better overall revenue performance.

2. Implementing a header bidding wrapper

To manage multiple demand partners efficiently, you need a header bidding programmatic wrapper. Basically, it is a framework that standardizes the auction process. As a result, multiple bidders can compete, and there is no need to provide each one with individual code implementations. Some of the workflows that are handled by a wrapper include:

• Auction rules and settings

• Timeouts and latency management

• Prioritization and selection of the best bids.

In addition, by using a wrapper, publishers can easily add or remove bidders without modifying their site’s code repeatedly.

Many publishers opt for a custom header bidding wrapper. Such a solution can be built with JavaScript. Ideally, header bidding wrappers are integrated as parts of a larger adtech system, which may include a supply-side platform. In some cases, additional technical expertise is required to set the wrapper properly.

3. Configure auction settings and floor prices

To optimize header bidding performance, you need to fine-tune auction parameters. Some of such parameters are timeout settings and floor prices. Make sure to configure them to prevent revenue loss due to inefficiencies. We also suggest to complete the following steps:

• Set an appropriate timeout (for example, 500-1000ms) to ensure that bids arrive before the ad server is called.

• Define floor prices to ensure that no impressions are sold at undervalued rates.

• Test ad placements to make sure that all ads are delivered seamlessly without decreasing page speed.

Companies that misconfigure these parameters risk losing profitable bids, having slow page loads, or running inefficient auctions. It is important to allocate the necessary expertise to ensure continuous monitoring and optimization.

The rise of in-app header bidding

Header bidding technology started as a promising trend in web advertising. However, it expands beyond traditional web environments. Nowadays, more and more companies use it in mobile companies to ensure faster and more efficient ad-buying models. Some of the world's most notable tech giants are already implementing this approach. This list includes Google AdMob, Amazon, Oath, MoPub, and Facebook.

It is important to note that header bidding in mobile apps operates differently from its web-based counterpart. The point is that mobile apps lack a traditional page header. Meanwhile, the basic aspects of the process remain the same. Multiple demand partners submit bids simultaneously before the ad request reaches the server. The highest-paying ad wins in real time.

The future of in-app header bidding

Header bidding evolves rapidly. These are some important trends that will shape the future of this adtech trend.

First-price auctions are the new standard

The advertising industry is rapidly shifting toward first-price auctions. When it comes to such an auction, advertisers pay exactly what they bid for an impression. As a result, the pricing model becomes more transparent and predictable. This marks a departure from second-price auctions, where the highest bidder only pays slightly more than the second-highest bid. One of the greatest cons of second-price auctions is that they may lead to pricing inconsistencies and potential manipulation. Meanwhile, the transition to first-price auctions is all about greater fairness in programmatic advertising.

Bid shading becomes a popular transitional strategy

Many demand-side platforms are currently adjusting from second-price to first-price auctions. In such a situation, both advertisers and platforms face technical and strategic challenges. In particular, advertisers often try to bid in a way that assumes they will pay less than their full bid. As a response to such a trend, bid shading has emerged as a temporary solution. With this practice, bid amounts are automatically reduced. This brings them closer to what would have been paid in a second-price auction. As a result, advertisers can avoid overpaying for ad placements.

The rise of mobile and native ads

We may witness the growing popularity of mobile, native, and interactive video formats. Many marketers still rely on banner ads, but mobile-optimized and immersive ad experiences are steadily taking the adtech market over. Many publishers that focus on mobile-friendly ad formats achieve greater profitability due to the higher demand for their inventories. The use of native and interactive ad placements is becoming essential for maximized monetization opportunities.

Consider TeqBlaze as your trusted partner

While header bidding may be a very profitable approach for both publishers and advertisers, it should be enhanced with a comprehensive adtech ecosystem. Developing such a solution might be a challenging task that requires market-specific expertise. TeqBlaze is ready to help, as we are a company with a vast portfolio of advertising solutions and successful projects. We leverage our deep knowledge of the market and its most significant trends to deliver solutions tailored to the needs of each specific customer.

Our expertise can be proven with a rich portfolio of successful cooperations. For example, we provided a U.S.-based connected TV (CTV) advertising company with greater control over its ad inventory. With our SSP+Ad Exchange platform, the customer managed to gain seamless and convenient integrations with demand partners. We also helped a US-based SSP platform provider boost their profitability by providing them with the functionality of our white-label SSP solution. With our customization and automation features, the customer managed to gain greater results, such as 1 billion impressions and a 10X income increase.

And, for sure, we can help our clients get game-changing header bidding solutions tailored to their needs. Whether you need a custom adtech solution for your goals or technical consulting on advertising intricacies, we are ready to assist!

Final word

To sum up, header bidding has transformed the digital advertising landscape. This approach, which is based on fair auctions between demand partners, brings many benefits to both publishers and advertisers. The key advantages of header bidding are maximized revenue opportunities for publishers and fair market pricing for advertisers. As the industry continues to evolve with trends like first-price auctions and mobile ad innovations, adopting a well-structured header bidding strategy becomes crucial for staying competitive. All you need to implement it properly is technical expertise. TechBlaze, a company with the deepest knowledge of adtech market and its technological trends is ready to assist.Contact us to embrace the power of header bidding!