Deciphering Header Bidding

2019 has been the year of in-app header bidding.

You might have found a lot of people in the industry are talking about this technique, and that it can decrease fragmentation between demand sources, improve transparency and achieve higher eCPMs. Without further ado, let’s now dive into header bidding to see how it increases yields.

What’s header bidding?

Header bidding is a programmatic solution for mobile app developers that increases competition by making premium ad inventory available to multiple buyers at the same time, the highest bidder wins and gets the impression.

This bidding method first started with desktop web advertising a decade ago, allowing publishers to implement code in a web page’s header to send out ad requests. Recent years’ technological development enabled the mobile app industry to start implementing with similar models, and this is in-app header bidding.

Before header bidding, waterfall dominated ad stack optimization

Before header bidding, the preferred technique publishers use to optimize ad stacks was waterfall.

For publishers who look to monetize, choosing the right Ad Networks is important. And most publishers would integrate more than one Ad Network in order to contain risks. However, when the number of demand partners grows, how to control the traffic for each platform needs to be considered. Therefore, there comes waterfall. Waterfall helps publishers optimize remnant ad inventory by creating a bidding priority hierarchy amongst different Ad Networks, increasing publishers’ chance of selling impressions to the highest performing Ad Network.

It also improves fill rate. Here is a simple example: a publisher who wants to fill ad requests as much as possible, would use waterfall to cascade down to lower-weight Ad Networks to fill the requests unfilled by premium Ad Networks.

Waterfall has limitations

However, there are limitations with the waterfall approach. Key problems amongst these are:

1. Ad request loss

As we all know nothing is perfect, so is waterfall. Its working mechanism naturally determines some requests might be lost due to latency or timeout problems. With more ad networks in the waterfall, there is greater chance of losing ad requests.

2. Publishers unable to know the eCPM until the ad is served

The main restricting factor of waterfall is that the eCPMs publishers update daily are based upon historical values, but ideally, real-time values rather than historical ones should determine eCPMs, in order to get the highest revenue for publishers.

In fact eCPMs are hardly the same from one impression to another. Fixing on historical values would also make advertisers with high bids but down the waterfall sequence cannot get a chance to make the bid.

Above problems lead to lower revenues for publishers. Unlike waterfall, header bidding allows for different demand sources to bid against each other simultaneously without preferential treatment. Each impression is auctioned at the highest possible price in real time, so the revenue increases.

Why header bidding?

Header Bidding is a seller technology that let buyers access more of the inventory they want. While some demand sources pay fixed prices to reserve ads, other decide how much they want to pay based on user attributes and in real time. With header bidding, buyers now can bid on valued impressions prior to the ad server ever being called. Publisher’s ad servers need to know this pricing information from all demand sources ahead of time, so they can make the right decision about what campaign to show. Ad servers can now intelligently allocate each impression to the right demand source.

Previously, it’s impossible to have an Ad network to respond to each single ad request, so publishers were trying to get the highest income from IAA by waterfall. Now with header bidding, every Ad Network can bid simultaneously for each ad request.

How to implement header bidding?

1. Implement header bidding on your own.

In order to implement in-house header bidding, you’re required to add prebid code to your own mediation. Notably, having premium demand partners is key to maximizing revenue in this scenario. As a publisher, if you already have relations with ad exchanges or SSPs, then you are in a good position to add them as header bidding demand partners. If you haven’t already, it’s highly suggested to do so.

Since header bidding allows multiple demand sources bidding at the same time, you must make sure you have enough capability to address timeout issues.

2. Work with third-party mediation platforms

For example, you can implement header bidding by integrating AdTiming SDK as your monetization solution.

As the leading mediation platform in APAC, AdTiming enjoys extensive connections with over dozens of premium demand sources. This gives us advantages to run truly unified auctions and accelerate the adoption of in-app real-time bidding at scale.

What do publishers gain from using header bidding?

We see publishers benefiting from Header Bidding on three fronts:

To conclude

Header bidding solutions like AdTiming now offer greater efficiency, higher fill rate, increase publishers’ revenue, and hence enable them to put more time and resources on their apps.

Currently, not all Ad Networks support header bidding. Waterfall is still one of the viable options when there are fixed eCPM campaigns to be trafficked. Combining the advantages of both techniques to help publishers with their monetization would be the trend and an effective solution.