What is Header Bidding? A complete guide for publishers

Sabqat Ruba

Published on May 27, 2022

What is Header Bidding? A complete guide for publishers

Header BiddingIn-app Header BiddingPublishersProgrammatic Approach

One of the popular buzzwords in the ad tech industry, header bidding, is something that every publisher must look out for. The fact that it has become the talk of the town drives us to write this blog post, addressing the most commonly asked questions about header bidding.

What is header bidding?
How does header bidding work?
What are the types of header bidding?
What are the advantages of header bidding?
- What is the waterfall setup?
What are the disadvantages of header bidding?
Does header bidding vary for websites and apps?
What are some top header bidding companies?
Plus - Technology advancement: OpenPath by The Trade Desk

Read on to find the answers.

Question #1: What is header bidding?

It’s a dream come true for publishers to sell their ad inventory for the maximum ad revenue possible. Header bidding does exactly that.

Header bidding is a programmatic advertising approach that allows publishers to auction their ad space to multiple ad networks, ad exchanges, or SSPs at the same time. The highest bidder gets to advertise on the ad slot. “How does this help publishers”, you ask? Publishers get a chance to increase their ad revenue by selling each impression at maximum value and the ad loading time is reduced owing to simultaneous bidding.

Here’s a pictorial representation of header bidding for a better understanding.

Header bidding auction - How auctioning happens in a header bidding setup

Question #2: How does header bidding work?

Here’s a simplified explanation of how header bidding works:

Publishers insert a JavaScript code called wrapper code in the <head> section of their website.
The auction starts when a user lands on the website and the web page loads.
Bidders simultaneously bid on the user impression through SSPs, ad exchanges, etc.
The bid information is sent to the ad server.
The ad server selects the winning bid, and the ad is shown to the user.

This process involves header bidding wrappers and adapters. An adapter is a programmatic demand partner’s entity that helps connect with its demand. A wrapper is a framework that holds all the adapter code in the <head> section of the web page. Publishers can easily rely on a wrapper to set the rules for an auction and manage advertisers.

Question #3: What are the types of header bidding?

Header bidding is of two types: client-side and server-side. The auction is handled on the publisher’s website or browser in the case of client-side header bidding. Whereas in the server-side, the auction happens on the ad server.

Server-side header bidding is more efficient because making changes to the server is easier than modifying website code whenever advertisers need to be added or removed.

Question #4: What are the advantages of header bidding?

One of the reasons why header bidding was introduced is to have a system contrasting the waterfall setup - to overcome its limitations. Let’s learn more about the advantages of header bidding over the waterfall setup.

What is the waterfall setup?

Also called daisy-chaining, waterfall bidding follows a sequential system of ad networks/SSPs arranged based on historical data (the advertiser that has worked most with the publisher before is placed first). Say the publisher sets a floor price of $2, which means the winning bid must be at least $2. The ad request is passed on from one bidder to another until the impression is bought.

Waterfall auction - How auctioning happens in a waterfall setup

The disadvantage of this approach is that buyers could be willing to pay more for the impression but the ad request never reaches them because the impression was already sold. Moreover, if there are no bidders, the floor price is continuously reduced until the inventory is bought. Either way, the publisher gets a substandard price for their inventory.

This can be avoided with header bidding because the auctioning happens simultaneously for all the advertisers.

Below are some other advantages of header bidding for publishers.

Maximized revenue with more demand: Multiple demand partners participate in the auction and may be further connected to DSPs. This means increased competition in bidding and better chances for the publisher to sell their ad slot for the highest bid possible.
Better control over advertisers: Header bidding enables publishers to choose which advertisers participate in the auction, even allowing them to prioritize one or more of them.

Better ad quality: Advertisers will bid more for an ad slot if they need the publisher’s audience. This in turn means improved ad quality for the publisher.
Maximum transparency: Even though many demand partners are involved in the auction, header bidding ensures transparency. Publishers can access information about the sold inventory along with the bid-level data and other analytics.

Question #5: What are the disadvantages of header bidding?

As much as it is advantageous, header bidding also has its downside.

Complex setup: Implementing header bidding is complicated because it involves choosing a wrapper, integrating codes, etc. Even though it eases work for publishers, it still adds more responsibilities to their plate.
Additional operations: Making changes to the code when adding or removing advertisers is an extra task and requires technical expertise. This also results in increased costs.
More latency: In client-side header bidding, the process of holding an auction - integrating the code, calling demand partners to bid, securing bids, and choosing the winner - can lead to page latency. However, this issue can be avoided by implementing server-side header bidding.

Question #6: Does header bidding vary for websites and apps?

Header bidding for mobile applications is referred to as in-app header bidding. Both the programmatic advertising approaches are similar but with only one difference - a piece of code is embedded into the header section of a web page in web header bidding; in contrast in-app header bidding involves integrating an SDK into the app that will handle the auction.

Question #7: What are some top header bidding companies?

Below are some popular companies that offer header bidding.

Pubmatic Open Wrap
ironSource LevelPlay
AppLovin MAX
Rubicon Project
OpenX

Technology advancement: OpenPath by The Trade Desk

Recently launched by The Trade Desk, OpenPath aims to eliminate inefficiencies in the programmatic setup by allowing advertisers to directly access publisher impressions without an intermediate SSP. This eliminates the cost of deploying an SSP for the publishers. You can get more information about OpenPath from The Trade Desk.

If we missed answering some questions, reach out to us and we’ll try to help.

Category :

App Monetization

Game Monetization

Website Monetization

Programmatic Advertising