Header Bidding Explained in Detail

Consumers worldwide choose streaming content online over outdated linear television and cable services. Connected television publishers know that, and they feel pretty excited about how the industry is evolving and the numbers of users is increasing year upon year. Plenty of studies confirm the above statements, and one of them was conducted by the Leichtman Research Group. According to it, 39 percent of US adults view connected TV content every day, while 60 percent stream content via a connected TV device every week. This study also shows that 54 percent of US consumers aged 18-34 use connected devices to access video content every day. 

This makes CTV publishers and marketers search for the most effective ways to monetize their inventory for higher revenues. Quite a few strategies are known, and one of them is the so-called header bidding technology.

So, what is header bidding all about? With this automated auction technology, publishers always know how to sell advertising inventory for the best price possible. This technique is popular, but not so many CTV publishers have mastered it. That is why we suggest taking a look at this article to know how header bidding works.

A Little Bit of History

Prior to header bidding gaining popularity in around 2015, many publishers used so-called ‘waterfall auctions’ which organized their inventory sales into tiers. This is how it looked: the inventory was offered by its owner to a single advertising network first and then to other networks in descending order of significance. Publishers did not stop until the last impression was sold to an ad network. The technical setup was quite easy, and it made sure that publishers weren’t left with unsold ad spaces, which meant that waterfall auctions were the method of choice for ad inventory sales for a number of years.

Still, it had some drawbacks that forced publishers to switch to another model. The main pitfall was that waterfall auctions fully ignored pockets of high-value inventory and decreased rivalry, capping a publisher’s income. Most of the publishers had no idea how sales tiers were designated. Different sellers have different prices and revenues. This fact did not allow for fair and equal market competition, so the market players came up with an alternative solution.

The solution, named header bidding auction, made it to ad tech allowing advertisers to send bid requests simultaneously to all the demand partners and provide publishers with transparency, full control over auction rules, and an even playing field. This model makes it possible to submit bid requests simultaneously to every demand partner. That is how content owners obtain complete control over the rules of the game, as well as equal conditions for everyone.

Header Bidding Model: a Definition

Header bidding is a type of programmatic auction in which bid requests are simultaneously submitted to all the demand partners. This auction works in real-time. It does not require any manual actions as it is fully automated. Header bidding allows publishers to offer the same inventory to numerous bidders concurrently, which is something that waterfall auctions lacked.

This model makes it possible for publishers to configure different filters (e.g., floor costs and targeting criteria) and the system automatically chooses the highest bid that corresponds to the selected criteria. Then, the ad creative pops up on the user’s screen and it all happens in the blink of an eye. In other words, it means that every single ad impression is open to an unprejudiced and competitive bidding process that allows them to be purchased for their maximum price that the market will provide based on the available demand.

Header bidding allows publishers to earn higher profits by making the inventory sales more transparent and straightforward. That’s why this model is at the leading edge of connected television advertising market development. The header bidding model also offers valuable perks when used properly.

Header Bidding: Client-Side vs. Server-Side

In the case of traditional display, at first it was client-side or in other words browser-side header bidding. It works this way: first, a particular header bidding wrapper should reside on the publisher’s website. An example of such wrappers could be prebid.js. After that, it should be executed within the user’s browser. Simply said, the entire process takes place in the header of the website displayed in the browser, from submitting/obtaining bids to choosing the participant with the highest bid. However, what happens in cases where the ad creative is greater than the ordinary lightweight banner? The browser-based model then contributes to latency at the former page load and auction execution. It also happens when a user has low-speed internet.

To avoid issues related to maintenance costs and latency problems, server-side header bidding was launched as a response to market needs and is gradually gaining traction among publishers. When this model is used, bid requests are submitted to a server that serves as a clearinghouse for most players taking part in the auction. A dedicated server hosts the auction from its start to its end. These special servers conduct all the stages of an auction way quicker than browser-based wrappers. In fact, it is the only option to run advertisements on over-the-top devices.

Moreover, bid requests have no restrictions when a server-side header bidding model is involved. It all leads to publishers getting higher ad yields and fill rates.

More Benefits of Header Bidding

Higher advertising fill rates

The video header bidding model initiates numerous SSPs and/or advertisement exchanges at once for bidding on a scarce supply of ads to air. A greater number of participants interested in purchasing impressions enter the auction, and the chances to bid and win are equal for all of them. As a result, publishers are able to sell more inventory and the ad fill rate increases.

Higher profits for publishers

When cost per thousand (CPM) values are established fairly for everyone, publishers make more money by selling their inventory. In this case, “fairly” relates to competitive transparency among purchasers. Some auctions based on this model experience a growth in revenue between 15 to 100%. It is determined by the number of buyers and the difficulty of the programmatic stack.

Better bidding transparency 

Header bidding allows for the monitoring of the demand partners. Who are the demand partners? In this case, these participants of the auction include advertisement exchanges, DSPs, and networks. Various header bidding analytics instruments help track and assess a partners’ performance. Moreover, because CTV/OTT demand partners are directly connected to header bidding servers, publishers are able to keep an eye on how much they are earning for their inventory. One of the time-tested ways to sell impressions to the top-performing partners and obtain maximum revenue from every deal is to find a trusted team of experts like TheViewPoint.

How Does Header Bidding Help Advertisers?

Header bidding is of utmost interest not only to publishers. Advertisers can also gain substantial benefits if they understand how this model works.

Greater transparency

Header bidding empowers publishers to optimize inventory distribution by proposing the same impression to numerous ad exchanges. That is why this model stands for higher transparency, which in turn means advertisers can use their budgets more effectively and maximize the amount of premium inventory they can afford.

Better optics on available inventory

Just because inventory is available does not necessarily mean it’s the best, and the goal is to detect the best option. Using the header bidding model, advertisers can obtain a full view and decide which inventory to target and purchase. 

Global reach

Having access to inventory at scale translates to the opportunity to have advertisements reach niche audiences and global markets. This allows advertisers a much greater degree of diversity in targeting potential customers.

Takeaways

Both publishers and advertisers should know how the header bidding model can bring perks from programmatic video advertising. As the model makes its way into the CTV universe, and as CTV rises in popularity as a medium, video content publishers in the industry should look towards implementing header bidding to sell their ad inventory. The model offers new opportunities, making it possible for publishers to increase their revenues. 

Header bidding can be tricky from a certain point of view but those market players who are less tech savvy can find help in the shape of platforms like TheViewPoint. Such partnerships can lead to more effective inventory sales. We’ll control the process from A to Z, helping you hit your targets.