The display advertising space is constantly evolving, and the bidding process is no different. So let’s discuss the use of header bidding. Also known as advance bidding or pre-bidding, this practice is gaining ground quickly even though it can be complicated.
What is header bidding? At a high level, header bidding is an advanced programmatic buying technique that allows publishers to offer their inventory by conducting direct auctions. By doing so, multiple demand sources can bid on the inventory simultaneously. So publishers can extract more revenue from their ad inventory while advertisers get a shot at the most desirable impression inventory.
Previous Programmatic Buying Vs. Header Bidding
Through the previous programmatic buying, publishers used a waterfall system: Inventory is first offered by publishers to the highest-valued sales channels. Inventory that isn’t sold is then offered to the second-ranked, less valuable sales channel. The process continues until the inventory has sold. The system works, but there are some inefficiencies in the process.
With the previous buying process, publishers believed they didn’t receive the true value of their inventory, effectively leaving money on the table. As offered impressions are passed onto less engaging channels, publishers are left to settle for decreasing sums of money. For advertisers, it also means that it becomes increasingly harder for display banners to end up in front of the most rewarding and relevant audiences.
Header bidding provides a different, more satisfying approach. This is because the bidding process happens simultaneously instead of sequentially. Furthermore, the process focuses on all available impressions, not just the impressions available after direct sales. The end result is that it gives publishers more control over – and higher rates for – their ad space.
Header Bidding Has Its Shortcomings
A concern worth mentioning is that header bidding is a complex setup to install. The problem lies in the effect that header bidding has on a publisher’s page load times. With each additional Supply Side Platform tag that a publisher plugs into their page, further time is required for that page to load.
In this day and age, this delay presents a risk. Publishers are already filling their pages with third-party ad tags. As a result, web pages have slowed down and some alienated readers have been encouraged to install ad blockers.
While the header bidding process is less than ideal, it does allow publishers to chase those additional dollars in revenue. When you combine that with the additional control it provides them, it’s clear why more publishers are moving forward with header bidding.
If you want to learn more about display advertising, read Reach and Retain: Top 10 Performance Display Tips.