Header Bidding's Path to Maturity ... and the Road Ahead

By Rubicon Project InSites Archives
Cover image for  article: Header Bidding's Path to Maturity ... and the Road Ahead

The origins of the publisher strategy called header bidding is something many would debate.  What was clear was publishers wanted to change the dynamics of how their inventory was valued.  The way to do that was to have multiple sources bid on an impression instead of just one.  This created competition, not only between advertisers on a single exchange but between exchanges.

Early pioneers quickly saw significant revenue increases that other publishers could not ignore.  Everyone wanted to be on the bandwagon but faced an immediate obstacle; header bidding required technical resources that most publishers did not have at their disposal.  The early adopter was typically a programmatic-only publisher.

These publishers didn't have sales people out selling but instead relied on programmatic revenue.  Their operations teams weren't focused on RFPs from agencies but on understanding exchange dynamics.  Having this focus, plus some development talent, publishers could start testing header bidding strategies.  Prebidopen-source technology with built-in transparency quickly became the standard header bidding solution for many publishers.

However, publishers didn't typically have the dedicated technical resources to work through all the complexities of header bidding implementations.

That barrier is now in the past.

There are certainly publishers who are engineering their header bidding solutions at very deep, technical levels.  But, for publishers who want to focus their resources elsewhere and still gain the revenue lift of header bidding, there are now partners -- such as Rubicon Project -- that can help advise and implement the necessary pieces to optimize revenue.  These companies have implementation teams and experts who are dedicated to setting up prebid solutions quickly and in line with each publisher's particular strategy.  Many times, they also offer support around the clock to make sure the inventory's value is fully maximized.

The result of more participation by more publishers using header bidding has been that buyers are now able to look at and assign value within a larger universe of impressions.  Prior to header bidding, publishers would only expose unsold inventory; now, in most cases, all of a publisher's inventory is available to buy through programmatic channels.  This works well for a publisher who might see a programmatic buyer pay more than a direct-sold buyer, making the publisher more money.

Once again, there's a caveat.  It has created confusion for buyers who might find they are bidding against themselves on the same impression but from different sources.  Both buyers and sellers have taken to gaming the exchanges in an unnecessary arms race -- a shame since header bidding could bring transparency to the marketplace and not contribute to the trust that exists.

But programmatic doesn't have to be a murky place where you really aren't sure if your interests are served.  An example of this has been the move to first-price auctions.

To the layperson, first-price auction mechanics are the easiest to understand.  However, for a variety of reasons, ad exchanges have historically operated second-price auctions.  As the exchanges have moved to first-price auctions, many buyers have been caught unaware and found themselves paying too much for impressions.

With the new level of header bidding maturity, though, what has started to emerge is that buyers are optimizing the number of partners they use and are getting a clearer picture of what they should buy.  Programmatic Guaranteed and Private Marketplaces now provide a way for buyers and sellers to work in a more direct way, but with the efficiency of a programmatic transaction.  It is true that some of the automation that programmatic promises is still manual -- "programanual" is a term many ad operations people use to explain how they operate.  However, they are finding that the premium programmatic partners are offering support to help connect the pipes needed to let the revenue flow.

Expect this trend to continue as partners come up with ways for buyers to work closer with sellers to get the right impression in front of the right person at the right time ... at the right price.  As that promise of programmatic is realized, trust between all parties will grow and with it more effective advertising dollars finding their home on digital.

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