Two years ago, header bidding was a hack. Because we like to be a technology innovator, we started offering it as soon as we understood the way to make it work. We were asked for it by our customers, albeit only by a few at first.
Here’s why header bidding works. In the ad serving world, most advertisers want guaranteed impressions and most publishers want decent prices for their inventory. But DFP, by conducting real time auctions with cascading prices, simply drove prices down, which meant that advertisers might have paid less, but were not guaranteed their impressions either.
When a consumer visits a site, she’s a valuable commodity to an advertiser. So she’s served the best ads first: the ones that are bought direct. That’s because the ad server brings those up first, because they’re the ads the brand has paid the highest price for in exchange for a guarantee they’ll be seen.
If the consumer stays long enough on the site, she exhausts the “frequency cap” (the number of times the advertiser wants her to see the same ad), and then she starts to see ads bought at auction (RTB) where many more advertisers bid to serve an ad. That produces a cascade of dropping prices for the publisher’s inventory, commonly known as a waterfall.
After a while, people learned that this system really benefitted neither the advertiser nor the publisher. So the hack was to devise an auction outside the ad server in the header of the page. It loads before anything else on the page. The publisher now has control of how much he can charge for your visit. That first impression can be the most expensive for the advertiser, but it is guaranteed.
Publishers who use it have reported 30-60% increased revenue. For the advertiser, it means the ability to get first look at every single impression, which wasn’t possible otherwise. Advertisers were, in essence, buying blind. Now, whether they win the impression depends on how much they are willing to pay.
This has been a boon for prices in digital advertising altogether. Advertisers who buy through RTB are now on an equal footing with those who buy direct.
Because of the revenue benefits publishers are realizing from header bidding and the premium inventory now available to advertisers even through automated buys, programmatic advertising is finally coming into its own as a potential route to build a brand, and is able to shake off the reputation of being a low-quality, direct-response channel. Many premium publishers, who only wanted to sell direct before as a way of preserving the value of their inventory are now feeling comfortable moving to programmatic buying. It didn’t take long to see the benefits of better prices combined with more streamlined workflow.
Now, header bidding is almost a standard in the industry. We thought it might be, and that’s why we developed the methodology for doing it before everyone else. We even know how to do video header bidding, which most people are still dreaming about!