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Unlocking Revenue Potential with Header Bidding: What, Why & How

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To bid or not to bid? The challenges

Consider yourself a publisher who has ad space to rent out on your website. Now the usual process is that your site reaches out to its ad server to get an ad and the ads served first are generally those that are handled by your marketing team. The leftover space is then made available through an ad server in way that is referred to as the waterfall sequence. Unsold inventory is offered to the top-ranked ad exchange, and then, if it remains unsold, it goes to the second-ranked and so on.

This process is far from flawless as it works on volumes where the highest bidder gets allotted the best space. Also, several publishers who use Google’s DFP ad server employ a setting that allows its Ad Exchange (AdX) to outbid any of the winning waterfall bidders because AdX gets the last bid. All this adds up to inefficiencies in the entire buying process.  This model thus ignores high-value inventory opportunities and reduces competition. In short, advertisers don’t really get the space they are worth and publishers’ capacity to earn revenues becomes artificially capped.

Making way into programmatic buying:  Header Bidding

To make operations fairer, transparent and far more effective for all parties, the digital ad industry is delving into technologies that allow exchanges to bring in demand before the ad server call. To achieve this, publishers insert a piece of java code in the header of their site pages. The code then reaches the supply side platforms (SSPs) for bids, even before its own ad server’s direct sales are called. Here the entire process of bidding is simultaneous.

Here’s how it works:

  1. User requests a website
  2. After request, the user is redirected to one or many SSPs
  3. User reaches out to one or many SSPs in parallel
  4. SSPs conduct auction with DSPs and internal network demand
  5. DSPs respond with bids
  6. SSP determines winning bid value and returns to the user
  7. User passes bid value into ad request and calls Publisher Ad Server
  8. Ad server determines final line item to serve and redirects User to Marketer Ad Server
  9. User calls Marketer Ad Server
  10. Marketer Ad Server returns final creative/advertisement
  11. User calls track back to SSP

Transparency, visibility & efficiency: Benefits unsurpassed

With header bidding, publishers have the option of letting any ad exchange beat a direct impression. This entire process focuses on all available impressions and not just direct sales.

Programmatic buyers can now have visibility into publishers’ inventory. Increased visibility into premium inventory greatly increases conversion rate. Also, more accurate inventory insights build better forecasting capabilities to understand the true availability of a buyer’s target audience.

By opening up inventory in smaller global markets, or highly specified ones, header bidding enables buyers to achieve campaign goals in a highly targeted and efficient manner.

Another great advantage is that programmatic buyers no longer have to depend on Google’s ad AdX and DoubleClick. Google’s dynamic allocation is a huge obstruction for publishers and with header bidding, the latter can bypass this and not depend on AdX to cherry-pick inventory.

The future is here

Many in the ad industry contest that header bidding increases the load time of webpages for me and many others like me vouch for such advanced technologies that enable visibility into premium inventories and allow for developing disruptive forecasting and predictive models, that can unlock valuable insights into high value marketplace. Header bidding is the future of programmatic buying and the future has indeed arrived.

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