This article was originally published in Venture Beat on November 29th, 2016. I have written previously about the conundrum of header bidding. While my thoughts back then are still valid, the technology has progressed and the market is following. Following this, I’ve posted the good, bad and ugly of header bidding.
Everyone is talking about the promise of header bidding, but what does it really mean to the future of publishing and mobile monetization? Header bidding is leveling the playing field by allowing sellers to make more intelligent inventory allocation decisions between traditional and programmatic demand. For advertisers, header bidding allows for better campaign delivery and optimization by providing more access to audiences at scale.
By implementing header bidding, publishers and app developers are able to expose every single impression to a programmatic marketplace. Many sellers are already reporting 40-50-percent increases in CPMs, and buyers have a new ability to bring their data to bear across multiple inventory sources.
The evolution of header bidding
Prior to this new technology, publishers were stuck using a single provider to handle all premium advertising campaigns that limited them to a one-size-fits-all solution. The method in which their inventory was being handled was typically aligned with that provider’s world view, leaving little room for innovation. The product development queue inevitably bent to the will of the masses, leaving many desirable features behind in the backlog.
Publishers used a waterfall approach to their media selling by selecting which partner to serve based on their highest average historical yield. In other words, publishers were managing inventory based on an assumption about the value placed on it by their subset of advertisers, rather than the market at large.
Higher yield on premium inventory
For publishers, header bidding has cracked the code to selling premium inventory with a novel approach, leveraging line-item placeholders in the publisher’s ad server. These line items are activated when an advertiser from an exchange has an ad that could serve against premium inventory. These exchange ads are delivered to the publisher’s page directly, instead of an ad from the publisher’s waterfall of direct line-items.
The promise for mobile is even greater
For mobile app developers, the opportunity for header bidding can maximize yield by allowing instant access to as many sources of demand as possible. Beyond circumventing the waterfall, header bidding allows mobile app developers to centralize all of their demand through a single SDK. It reveals the real value for each impression and cuts down on latency, a common issue for app developers who are concerned with slow load times and drained battery life.
Access to advanced audiences at scale
Now that the door is open, the ad-tech ecosystem has brought to bear a plethora of intelligent services for buyers. For instance, the open RTB system used by header bidding dramatically improves the efficiency of native ad formats. With native advertising, custom ads are being created for unique devices and environments. We are constantly seeing innovation surrounding native advertising formats that further open up the market to new inventory opportunities. With header bidding, the native advertising exchange is simplified for publishers who continue to invest in bolder concepts and new placements.
Publishers who use header bidding are bringing higher yield to media owners and increased audience access to advertisers. With header bidding, forecasting and media planning are simplified and improved. Header bidding allows exchanges to see every user interaction across the media. Exposure to that full funnel allows buyers to visualize audience data from many inventory sources. Acting on these opportunities is just as easy as finding them. Sellers can package their audience and inventory, offering a deal to buyers from within one of their preferred exchanges. Advertisers, on the other hand, can use any number of buy-side platforms to buy their audience.
The power of header bidding extends far beyond the publisher page. Media owners and advertisers also benefit from new tools that can power strategic initiatives. For instance, the use of header bidding will greatly simplify the process for remarketing specialists. With header bidding, remarketers are able to locate their exact audience on any retargeting platform of their choosing and they can trust that all of the available inventory is presented. They no longer have to make distinct deals with each publisher in order to find that audience.
With the weight of open market technology bearing down, it was only a matter of time before the publisher’s ad server was cracked open. All these solutions are already available and interoperable. They’ve matured over the last seven years on top of the OpenRTB protocol. Now with header bidding being widely adopted by publishers and app developers across the ad-tech ecosystem, everyone is seeing the promise that this new media trade can deliver for buyers, sellers, and consumers alike.