Header Bidding: Baby Steps, Big Change on the Horizon

Header bidding is this year’s ad tech hot topic – generating a torrent of tweets, not to mention the obligatory Linkedin posts. It has to be said though, a really clear, definitive and consistent set of conclusions on the subject is still lacking.

Which is not that strange, given it’s still a very new solution. But not just that - setups and tech still vary widely by publisher, and ultimately header bidding will only play out as well as each business allows it to.

As we all know, the long and complicated instruction manual always ends up gathering dust (or even in the bin). And what’s really called for here, as in all tech, is simplicity, clarity and trust that the machine under the hood just works as it should.

With this in mind, here’s our attempt to dial down the noise around what we believe is already a key part of the programmatic toolkit.

Where’s Your Head(er) at?

Programmatic advertising is becoming ever more widespread, already making up more than half of digital spend in a number of markets, and almost 80% of that total in the US this year. Against that background, header bidding is a very natural evolution. So much so, when you understand it, you’d be forgiven for asking “why doesn’t it all work like that already?”

Where it gets more complicated goes like this - as the market and knowledge around programmatic has grown over the past few years, so has an awareness of its dark side - the negative effects if it’s done badly.

Think of your programmatic setup as a kitchen – unless it’s well maintained, and you have talented people with the right training in house, from head chef to bottle washer (not to mention trustworthy suppliers), you risk seriously disappointing your customers.

So, what is header bidding? To understand, we first need to grasp what came before it:

In the clearest terms, before header bidding, we had the more comfortingly named ‘waterfall’ setup around ad sales. This meant a fixed set of inventory tiers (direct, private marketplaces (PMPs), RTB, house etc). Crucially though, it wasn’t that smart – in fact, those tiers didn’t even talk to each other. Even if you could make more money from prioritizing programmatic buyers for certain impressions over direct, this wasn’t an option. Each tier was either a yes or a no, serve ad or move to the next one. Fast forward to 2017, where high value PMPs and even programmatic guaranteed are on the increase, and half (or more) of ad spend may already be programmatic, and the waterfall already seems like a relic from the past.

This brings us quite neatly to the WHY:

Of course, it’s not just about the drive to have the newest, shiniest kitchen equipment.

The answer to why we need header bidding is of course revenue, and more importantly the money that the waterfall setup is already leaving on the table.

With header bidding, all of the above-mentioned demand sources compete with each other in real-time, so pricing, as well as allocation of relevant supply is brought back to the present. In other words, it’s smarter, more efficient – set up to properly optimise ad serving split between a range of different sources.

Bauer Media’s 5x Increase in Revenue

As a general guide, publishers can expect a 20% increase in revenues on implementing this setup, in some cases a lot more. To give one example, Bauer Media in the UK increased its daily programmatic revenue five times over with header bidding, and says on most days its private marketplace eCPMs are higher than brand direct. Even a 20% increase though, has been enough to convince a major publisher like the Telegraph to quadruple the size of its programmatic team.

All that said, as we all know from the legacy of ad blocking, a jump in revenue should not be at the expense of latency, or a poor user experience. Publishers need the tools and checks in place to monitor ad performance 24:7.

The good news here is that the best platforms provide this service as standard. Also, although it’s not often discussed, header bidding can actually reduce latency, if your waterfall set up includes the use of passbacks. Also, known as ‘daisy chaining’, it’s widely known that each passback costs about 15-20 per cent of available impressions simply being lost and ending up unsold. Using header bidding instead means reganing those lost and reducing the latency that comes with them.

On the other side, header bidding actually adds liquidity - your private marketplaces will have more available, relevant inventory to run on. As will your direct campaigns – since all available inventory is effectively pooled together, and sold more dynamically. Hence why header bidding is sometimes referred to as holistic ad serving. 

All in Your Head(er)

But why, you might ask, the need to defend header bidding in the first place? Surely, as you said, it’s the logical next progression for publisher ad sales?

Well yes – the problem is, as anyone’s seen the Lumascape will know, advertising technology is a crowded space, and maybe some of header bidding’s dark side comes where adopting it has meant a change from working with a single SSP or tech provider to several. And to some of those guys (or so we hear from other markets) this might look like the ideal opportunity for a “land grab” - to get onboarded by a bunch of premium publishers. To do that, let’s not rule out the idea that some might (shock horror) make promises neither their tech nor their human resources can live up to.

A True Recipe for Success?

Is a world of ‘wrappers’, ‘mediation’ and ‘key values’ (just some of the new jargon associated with header bidding) a step backwards to the early, unfamiliar days of RTB? A move back to the time when only a select few understood the tech, and were able to profit from it, to the detriment of those who didn’t?

Either way, we’re convinced the short-term pain is worth the long-term gain. True, some will use each new wave of innovation to make things confusing and over-complicated – but rest assured, it isn’t – or doesn’t have to be. At least if you’re working with a true publisher-friendly platform.

Of course – there is already talk of this process moving back where it started, out of the page header, back to the ad server – and we do expect this to happen at some point. At which stage, expect with any luck more standardisation, and perhaps even consolidation too.

Until then, we’re with you on this – baby steps – all the while, with an awareness that this is a critical stage in the evolution of online advertising – and the stakes around its success or failure are higher than ever.

To go back to the earlier kitchen analogy – no one gets two Michelin stars overnight. But the right setup, tools and people are all a prerequisite to cooking up a storm. 

How to Set up Header Bidding – a Simple, Five Step Recipe:

  1. We set up a meeting with the publisher to go through site structure and ad server setup
  2. Gather information on how price-tiers are structured in your ad server. From there, we work with you to set the decisioning logic for how to chose which ad will run in each case - for instance, whether it's from a direct booked campaign, or the winning bid from our exchange.
  3. Our engineering team joins in a startup call with everyone involved to get the process going
  4. The engineering team creates the custom solution for the given publisher and sends over all documentation and code to be implemented on the page and in the ad server
  5. Publisher implements code according to the directions and testing is done before going live
Daniel Ahlbert