HEADER BIDDING
I
T’S HARDLY POSSIBLE TO HAVE
an advertising industry discussion in
2016 without talking about header
bidding. The merits of the header bidding solution have been discussed widely – from trade publications to conference stages, and seemingly everywhere
in between, but usually the coverage
focuses on the simplest outcomes.
"This will
change the game
for programmatic,
allowing buyers
and sellers to truly
transact on valuable
audiences more
seamlessly."
In light of all the opportunities the
solution creates for publishers, header
bidding is certainly a technology worthy of attention. When implemented
on publisher websites and apps, header
bidding can increase fill rates and raise
the average revenue publishers see
from auction impressions. But that’s
not where the largest opportunity lies.
The real sea-change we’re about to
discover is this: by exposing every
impression to programmatic demand,
header bidding will enable publishers
to have better control over how they
monetize their entire inventory mix,
and over what types of opportunities
they can create for buyers. In particular, it will allow publishers to control
prioritization of private marketplaces and automated direct deals with
buyers. This will change the game for
programmatic, allowing buyers and
sellers to truly transact on valuable
audiences more seamlessly.
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This is an important point to underscore. Header bidding is a technical
means to a business end: better monetizing all inventory. So when evaluating the merits and success of header
bidding, let’s keep in mind that what
we really want to achieve for publishers is higher yield, and for buyers the
ability to truly buy under a model that
allows them to leverage data, buy audiences at scale, and on a guaranteed
and/or forward basis when desired.
WHERE TRADITIONAL AD
SERVING FALLS SHORT
The solution is in such high demand
because traditional ad servers can’t
offer publishers the controls they need
to take advantage of today’s digital
marketing opportunities – not without fundamental changes to how ad
servers work.
At almost 20 years old, ad serving technology, which does publishers’ bidding
in terms of how it prioritizes impression opportunities for a multitude of
eligible buyers, didn’t anticipate real-time bidding, automated guarantees, and other novel ways marketers
can now buy digital ads.
As a result, ad servers constrain publishers’ ability to take full advantage
of today’s advertising technologies.
They also force publishers to make
unnecessary trade-offs in terms of
volume and price when they do use
those technologies.
Two vestiges of the traditional ad server paradigm are particularly ill-suited
for the era of ad automation.
First, since indirect deals – those not
negotiated directly between publishers and brands – were once low-priced
remnant buys by definition, it made
sense in years past to relegate them
to the lowest rungs of ad server prioritization. The objective of those indirect deals was to keep publishers from
leaving money on the table by letting
them monetize ad space they simply
couldn’t sell directly to brands at market rates.
But those “indirect” ad buys have
evolved into “technology enabled”
buys – campaigns that can represent
the full spectrum of revenue opportunity and customization because
buyers are utilizing data and publishers are willing to expose more supply knowing that an increasing level
of priority and calculation is being
brought to the buy.
Secondly, the low priority, indirect
deals of yesteryear were sold at a fixed
price, at a time when it was ad networks that mostly filled publishers’
leftover inventory. Now that buyers
are able to bid for those impressions in
real time, based on the predicted value of the consumer who views them,
some of those indirect buyers submit
prices approaching top-tier rates.
Unfortunately, the fixed price paradigm locks those potentially high-dollar buyers at a lower priority level in
the ad server, artificially blocking opportunities for them to compete with
high-priced, direct-sold campaigns.
Both of these traits of traditional ad
servers suppressed publishers’ ability
to increase their revenue by maximizing high-value and technology-enabled demand. Traditional ad servers
also deprive willing buyers access to
high-value consumers on those publishers’ sites and apps – even when
they were willing to pay top dollar for
the privilege of showing them an ad.
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HEADER BIDDING
THE AD SERVER PLUGIN
Then along came header bidding (a
much older solution than a lot of people seem to realize) to make ad servers
work for the current time. Header bidding is akin to a plugin or adapter for
the ad server: it lets publishers that
use traditional ad servers get around
the artificial constraints on how they
structure their inventory and prioritize buyers’ access to it.
In the simplest terms, the mechanism that makes this possible is the
“pre-auction.” The page or app receives pricing information for all eligible buyers as one of the very first actions that occurs when a page or app
loads. This makes all the difference
for how the ad server can make its
decisions.
The results? Programmatic demand
can now compete with direct-sold
campaigns at any price or priority
within the ad server. Private marketplace deals (deals that are pre-determined between buyer and seller but
in which the individual impressions
are bought in the auction) can now
sit higher in the ad stack and enjoy a
higher rate of audience matching. Real
impression values can now be used to
determine prioritization of RTB campaigns instead of estimates and averages, fostering fair competition for
every impression, and giving high-bidding buyers a real chance to compete.
And publishers can now control how
all of these pieces interact with each
other.
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HEADER BIDDING IS ONLY AS
GOOD AS THE MARKETPLACE
IT CONNECTS TO
Given both the excitement about
header bidding and the complexity of
the implementation, it’s not surprising that some of its advantages have
been misstated or oversold.
"Where header
bidding will make
a real difference for
publisher revenue
and relationships
is in its ability to
prioritize automated
guarantees and
private marketplace
deals."
It’s fairly common to read, for example, that a primary advantage of header bidding is that it makes programmatic supply sources compete for
impressions, thus driving up revenue
for publishers. But what should in fact
happen over time is we reach an equilibrium where the right demand meets
the right supply at the right price. So
high value audience impressions will
garner more, and the lower will see the
opposite trend.
And while a thoughtful header bidding implementation and ad server
setup can increase opportunities for
high-bidding RTB buyers to win impression opportunities, I think too
much emphasis is placed on this outcome, obscuring a decidedly more
consequential advantage of header
bidding: where header bidding will
make a real difference for publisher
revenue and relationships is in its ability to prioritize automated guarantees
and private marketplace deals.
As more publishers awaken to that advantage of header bidding, I think our
industry will more clearly see where
the true promise of the solution lies.
After all, header bidding is about giving publishers more control and allowing demand to flourish without technical limitation.
Ultimately, header bidding is about
optimizing access to the marketplaces
that offer both scale and high quality
programmatic demand. Those marketplaces that provide both buyers
and sellers the best-in-class tools to
manage the full spectrum of deals,
have the most high-quality publisher
inventory, and have the audiences at
scale across devices will win.
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