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The CliffsNotes of Header Bidding

Written by Tim Edmundson

Oct 26, 2016

HeaderBiddingPostFB_LinkedInHeader bidding may not be a brand new concept, but it’s getting a lot of attention lately. Just like in high school when you had to write a book report on “The Odyssey,” reading the CliffsNotes was a nice alternative to spending your weekend with your nose buried in a book. So in the spirit of getting straight to the point, here is our summary of the need-to-know info for header bidding:

A.K.A | Header bidding is also known as unified auction or Pre-bidding.

DEFINITION | Header bidding is a technique where publishers, by introducing a line of code into the header, offer remaining inventory that was not used in the Direct Buy to the open market; thus creating a secondary auction in multiple auctions that are simultaneously happening in the Open Exchange.

HOW POPULAR AMONG PUBLISHERS | As of November, 53% of large publishers were using the technique and the number of publishers utilizing this is projected to continue to grow.

OTHER METHOD | Publishers used to rely on the “waterfall,” which auctioned ads based on publisher determined prioritization. With header bidding, every ad opportunity can be thrown out to network buys and SSPs. The highest bid then gets submitted to the publisher ad server.

IS IT A BETTER DEAL? | Advertisers should expect to pay 10-20% more than what they were paying in a private marketplace setting.

WHAT’S IN IT FOR PUBLISHERS | The biggest benefit that header bidding offers to publishers is greater yield. Publishers are always optimizing towards higher CPMs, and header bidding allows them to get more for inventory that they may have sold directly for cheaper than what it’s worth on the “open” programmatic market.

WHAT’S IN IT FOR BUYERS | Header bidding unlocks the small pockets of cookie-rich inventory that an agency or advertiser would not have had access to previously.

LIMITATIONS |
Latency – Hosting multiple auctions at once can lead to latency.
Standardization – OpenRTB specs don’t yet denote “header bidding” inventory differently.
Priority – Guaranteed, direct-sold campaigns (if under pacing) get preferential treatment.
Transparency – Advertisers have a lack of transparency into optimization, effective bidding, and performance attribution.
Consistency – Publishers are not consistent with how they implement header bidding. Some do it as “true” header bidding so everyone can compete, while others use it as another tier between direct deals and PMPs.

CRYSTAL BALL | Header bidding will replace traditional waterfalls for the most part, but there will always be some tiers in the system given the contractual obligations to execute header bidding under different terms.

STEELHOUSE’S POSITION | Header bidding is just the first step in the right direction towards holding an honest real-time auction which is the real solution.