It almost seems like an arms race to who is the most transparent in today’s programmatic ecosystem. What is really under the hood and how do we make automated ad buying safer, cleaner, and truly transparent for buyers and suppliers alike? Alliances are being formed between supply-side platforms (SSPs) and publishers, and similarly between competing SSPs, an example being six big exchanges publishing an “open letter” to the ad tech industry.
IAB Europe has released an educational and poignant white paper on header bidding and auction dynamics. This drastically needed overview of header bidding is great for those with a bit of knowledge as well as those who think header bidding is just a futbol move. The white paper provides an overview of how header bidding is increasing revenue opportunities for publishers . That may be true, but concurrently, it is increasing the workload to connect to the many available programmatic exchanges. Supply and demand sides both benefit, but at what outgoing cost?
Header bidding was established in order to drive more transparency in the programmatic ecosystem and to inherently drive more revenue to ambitious online publishers. Through a simple implementation (the key implementation types are outlined below) in the header of a mobile or desktop web page, the publisher could send all ad opportunities to multiple exchanges and direct partners at once. Think of it as a super auction. Insead of having to cascade down a waterfall sequentially calling partners from the most profitable to least, they can call them all at once and see who is willing to pay the most. Sounds perfect for the publisher but what about the buyer?
Prebid now offers a multi-format solution to allow publishers to put outStream/Native/banner formats in competition, however the auction is hosted for different payout models. For example, banner pays on CPM whereas outStream pays on vCPM. At Teads we predict a vCPM probability, meaning that we factor in scroll rate and creative errors to the returned bid price. The reason this is important is that it makes the auction fair, as returned bids are all for the same CPM model, not a mix which gives vCPM buyers an unfair advantage.
Buyers also benefit. Historically publishers would be reluctant to integrate too many partners, sending out sequential requests was either impossible due to latency or too costly. Now, buyers who weren’t considered in the past can now get their fair access.
All these benefits come with some challenges that are still being worked through. On the publisher side, making calls to so many partners slowed down the loading time on pages drastically. And, on the buy side, exchanges and Demand Side Platforms (DSPs) were receiving 10x the volume they had seen previously, taking a serious toll on server costs.
Some big players have shifted heavily into the header bidding space. In Europe according to a report by Roxot over 50% of Appnexus bids are on header bidding calls. Other large players are slower to make the move hoping to not have to compete with others for their ad slots.
Opinions may vary, but it is clear that header bidding is paving the way to drive much needed revenue to publishers and allowing all players, big and small to participate in the game.