What is header bidding?

Header bidding, also known as advance bidding or pre-bidding, is an advanced programmatic technique wherein publishers offer inventory to multiple ad exchanges simultaneously before making calls to their ad servers (mostly DoubleClick for Publishers). The idea is that by letting multiple demand sources bid on the same inventory at the same time, publishers increase their yield and make more money.

Header bidding is a much cleaner and better tech integration between revenue partners, ad tech companies and publishers compared to what’s going on currently.

How is this any better than how things work now?

For publishers, true programmatic efficiency is a bit like alien life: It’s probably out there, but no one’s actually seen it. Instead, publishers have managed their programmatic yield by daisy chaining sources in a waterfall structure: Publishers offer impressions in one sales channel, and if buyers don’t bite, they push them down to other, less valuable channels until some-one makes a bid. The system works, but it’s highly fractured and inherently inefficient. Publishers say the system leaves money on the table.

What do publishers get out of this?

The biggest benefit that header bidding offers to publishers is greater yield. Adding just a single header bid source can increase yield by 10 percent, according Potter. More, by combining their inventory into a single server-side supply, publishers can sell inventory on a perimpression basis, giving them more transparency into how much their impressions are actually worth.

Weren’t the supply-side platforms (SSPs) supposed to solve all this?

They were. The problem is that behind every SSP is a business that’s competing with all the other companies offering SSPs, a situation that has fragmented demand sources. One notable side effect of header bidding adoption is that it puts pressure on Google’s DoubleClick for Publishers ad server, which, through its dynamic allocation feature, lets AdX—but no other exchange—see and bid on every impression.

Header bidding seems like a good deal. What’s the catch?

Beyond being a complicated setup to implement, the biggest issue with header bidding is what it can do to publishers’ page load times. Each SSP tag that a publisher plugs into its page is yet another potential source of added page latency. It’s a significant risk these days. Publishers are already larding their pages with third-party ad tags, which have slowed down Web pages and forced alienated readers to install ad blockers.