Header bidding is a programmatic ad buying method that enables publishers to present their ad space inventory on multiple SSPs (Supply Side Platform), or ad exchanges, at once via an auction model. With header bidding, numerous advertisers can bid simultaneously to compete for advertising space on websites. Header bidding provides a win-win scenario, as advertisers can access coveted ad space more easily and fairly, and publishers can increase the competition for their inventory and earn more revenue.
What is header bidding?
Header bidding is a type of programmatic advertising that enables website owners and publishers to reach more potential advertisers. It works by sending out details of ad inventory to a large number of ad networks (ad exchanges or SSPs) for auction simultaneously. Header bidding is sometimes referred to as per-bidding or advanced bidding.
The header bidding method is used as an alternative to the standard way of selling advertising space which involves directly selling premium ad space on ad networks. The auction element adds competitiveness for premium space which can help to increase revenue for sellers.
Waterfall vs header bidding
Header bidding replaces the waterfall method, another programmatic advertising method.
The waterfall method involves offering ad inventory to different ad exchanges using a ranking system. The ad exchanges are ranked by average yield, using historical data. In other words, the advertisers who have paid the most for ads on average will be offered the space first. The publisher sets a floor price and if it isn’t met, the offer gets sent onto the ad exchange immediately below in the rankings, and so on, in a similar way to a tiered waterfall.
Header bidding, on the other hand, treats all bids equally without ranking them by average yield. This gives all the advertisers a fair chance to win the advertising space based on the strength of their bid against competitors.
Header bidding vs RTB
Header bidding is a subset of a broader auctioning technique called real time bidding (RTB). Real time bidding means that ad space is sold in real-time.
A good example of RTB is when you use a mobile app that displays ads periodically. During the fraction of a second while the ad is loading, a real-time bidding auction takes place in which all the advertisers compete for the ad space. The highest bidder is chosen within milliseconds and the ad is shown in the app.
Header bidding uses a similar method. When a visitor lands on a web page, in the split second it takes to load an auction takes place. The website uses something called a header bidding wrapper, which is a piece of code that sends a signal to demand partners requesting bids. A very fast auction takes place and the winning bidder gets to display their ads in the designated slots.
To clarify – header bidding refers to the auctioning of website advertising inventory, whereas in-app bidding refers to the auctioning of app advertising space. RTB is the umbrella term to cover ad inventory auction methods enabling the purchase of ad space on websites and mobile apps in real-time.
How does header bidding work?
The header process is very fast, with publishers typically setting a timeout range of around 400 to 800 milliseconds on a desktop computer and 800 to 1200 milliseconds on a mobile device. The header bidding process involves the following steps:
- A web user types the URL or clicks on a search result or ad to navigate to the publisher’s web page.
- The web browser begins to load the page.
- The web page contains JavaScript code which is executed during loading and sends a request to the ad exchanges or third-party header bidder provider.
- Advertisers automatically place bids through the demand partners.
- The advertiser with the highest bid wins the auction and the ad is displayed in the relevant slot or slots.
The main benefits of header bidding
Benefits for publishers
- Wider market: Header bidding means that your advertising inventory is opened up to a larger number of demand partners (ad exchanges). You can include an unlimited number of SSPs, in theory, which means they can access bids from more advertisers. It is a much more efficient way to find interested advertisers than sticking to one ad exchange platform.
- Increase ad revenue: As more advertisers will be able to bid on your ad inventory, the cost per mille (CPM) will rise, earning you more revenue. CPM is the price an advertiser pays for 1000 impressions. Publishers make more revenue with header bidding than the waterfall method, due to the fact that all advertisers submit their bids simultaneously. This means that a higher bid is never missed just because it happens to be lower down on the waterfall chain.
- Better fill rates: By offering ad inventory to a larger number of demand partners, there is a greater chance that your ad space will be filled. Unfilled ad space means lost revenue, so maximizing your fill rate through header bidding is recommended.
- More customization: Header bidding lets you gain more control over selling your website ad space. You can add as many demand partners as you want and drop ones that are underperforming, such as displaying ads that are unrelated to your content.
- Informative data: Compared to other advertising methods, header bidding generates a lot more data. Every ad impression is an individual sale that receives hundreds or thousands of bids. Analyzing all this data lets you set a more reliable floor price.
Benefits for advertisers
- Wider access: Due to the fact that publishers can list their ads on multiple exchanges, advertisers can potentially access a larger amount of ad inventory when they sign up with demand partners.
- More impressions: Compared to the waterfall method, header bidding creates a more level playing field where the highest bid wins, rather than basing it on historical data of previous average spend.
Benefits for demand partners
- More revenue for exchanges: Demand partners or ad exchanges get to increase the amount of ad inventory on offer which means more revenue for them.
How to get started with header bidding
If you’re a website owner or publisher and you want to implement header bidding on your web pages to potentially increase ad revenue, then we have set out some steps and advice for you to follow below.
Step 1: Make sure that your website qualifies
Before you start implementing header bidding, you need to make sure that you qualify for it. Although there is no set minimum in terms of web traffic, many demand partners or SSPs won’t allow publishers with low traffic. Many SSPs ask for at least 10 million impressions per month, with some asking for a minimum of 50 million, as anything less isn’t considered to be worthwhile for their advertisers. If you have less than the required minimum for SSPs, you may still be able to run header bidding by partnering with a reseller instead, sometimes known as header bidding providers.
Step 2: Set up an ad server if you don’t already have one
An ad server is needed if you want to display ads on your website. The most popular and biggest ad servers are Google Ad Manager, Kevel, and Smart Ad Server. Google Ad Manager is free to set up and is powerful enough to provide the data and support you need.
Step 3: Add a header bidding wrapper to your website
A wrapper is a piece of code that is added to your website that enables bidding through demand partners and forward on the winning bid to your ad server, allowing the ad to be displayed – a process that takes a fraction of a second. If you don’t include a wrapper, then each SSP will need to be integrated separately which means more code and the potential to slow down page loading.
Step 4: Add bidder adapters
A bidder adapter is needed to receive bids and pass them onto your wrapper. Each SSP will provide their own bidder adapter. To get the bidder adapter, you first need to sign up for a partnership with the SSP. Look for high-performing SSPs that have a good track record in header bidding.
Step 5: Test and monitor your header bidding integration
The final step is to check that everything works as it should. You can get browser extensions to help you monitor the performance of the demand partners and highlight areas to increase revenue or enhance bidding speed. For instance, you can install Google Publisher Console for Chrome or Headerbid Expert for Chrome or Firefox to monitor bidder performance.
The future of header bidding
Predicting the future of any technology is a risky business. However, there are certain trends that look likely to continue for the foreseeable future.
Hybrid header bidding is likely to grow in popularity as it can maximize revenue even more for publishers. In general, there are two approaches to header bidding, server-side and client-side.
- Client-side header bidding: Bidding takes place on the user’s web browser. Publishers use Javascript to enable real time bidding.
- Server-side header bidding: Bidding takes place on an external server. An API is used to make ad inventory available on an external server for demand partners to access.
The advantage of hybrid header bidding, which combines the two, is that advertisers can bid based on user cookies on the client-side, yet still access a wider market through SSPs on the server-side.
Hybrid header bidding is a win-win for both advertisers and publishers, as it usually results in higher CPM and fill rates due to the increased competition for ad space and faster ad loading speed.