What's Header Bidding & How Does it Work?

Ask a Centro Expert is a blog series from Centro where we break down the complicated tools, tech, and trends you've been hearing about in the trade pubs and around the office. We reach out to some of our in-house experts to ask the tough questions and turn them into bite-sized, palatable Q&As for your reading pleasure. Last month, we explored ad blocking. This month's topic: Header bidding. We talked to Jessica Burget, Centro's Director of Partner Development, for the break down.

In the simplest terms, how would you describe header bidding?

Header bidding is the technology that allows a publisher to have multiple demand partners compete to buy their inventory at the same time – and the best demand partner wins.

How is it different than how publishers traditionally manage their inventory?
Before header bidding, a publisher had to set-up a “waterfall" within their ad server, leaving the publishers to constantly evaluate which SSP/exchange partner to prioritize over the next – without actually knowing what their inventory was worth.

If publishers implement header bidding technology, they can work with more demand partners, increase revenue, and have insight and data into the value of their inventory.

Why is header bidding important?

At first, I think people and companies felt that header bidding was a passing trend or a fad that wouldn't last, but over the last few years, adoption has been tremendous on the publisher and SSP side.

In my opinion, if an SSP or publisher is not supporting header bidding, they are behind the industry and their competitors, and they are missing out on revenue opportunities.

How does header bidding work?

Currently, there are two types of header bidding: wrapper solution or server-to-server (S2S).

A wrapper solution requires placing a piece of code on a website, which allows the demand partners to bid on the inventory before the page even loads.

On the flip side, S2S technology is not within the browser, and it's when a publisher utilizes an external server solution. For implementation, a publisher and SSP will need to research the header bidding market to find the best fit for their business. After a company has vetted different partners in the space and made a decision, tech and implementation teams should be looped in to collaborate with the vendor.

What should we consider when selecting header bidding partners?

To narrow down the header bidding vendor short list, here's my advice:

• Be cognizant about maintaining relationships with publisher partners, not just the header bidding technology partner.
• To maintain unique demand, leverage the header bidding solution to secure partners that were previously inaccessible.
• Match the level of integration required to what internal staffs can handle. Not every company can tackle heavy development work for header bidding. And not every vendor can manage the development you want.
• Push for transparency in reporting insights. In S2S, if both sides don't push for this is, vendors will continue to be black boxes.
• A company needs its business to be aligned with header bidding adoption. Media operations teams need to understand how ad buys can change with this capability. And whose job is it to keep the organization informed on what you can do with header bidding?

How can the header bidding auction be accessed?

If an advertiser/DSP is working with any major SSP in today's digital world, then they are accessing header bidding inventory.

For an SSP to be a demand partner, work with the publisher to see which vendor they utilize. If both the SSP and publisher is integrated with the header bidding vendor, then come to an agreement to be a demand partner and begin the set-up process.

What are the benefits for publishers?

Header bidding allows a publisher to have access to more demand partners, increased revenue with higher valued inventory, and more accurate data on who is actually a good demand partner.

And how about the benefits for advertisers?

For advertisers buying programmatically, they now have the ability to compete directly with direct-sold campaigns.

What are the downsides to header bidding – from both perspectives?

From a publisher perspective: The downsides are scarce. From a business standpoint, it can be expensive and timely to implement a header bidding solution. From a technical standpoint, if a publisher chooses to utilize a wrapper solution, then they run the risk of page latency. If they go down the S2S route, cookie matching can be a challenge and they also need to make sure the S2S vendor isn't favoring their own demand over others.

From an advertiser/DSP perspective: The downsides are higher. Since everyone is on a level playing field, rates will increase across the board. Also, if a DSP is integrated with multiple SSPs that now have access to all of the same inventory, the cost of supporting multiple SSPs is now wasteful. I assume advertisers/DSPs will have to do more work evaluating who they chose to partner with over the next year or so.

What should we watch in the space and what does the future look like for header bidding?

Here are five things I predict we will see:

• More development supporting video solutions through header bidding.
• Publishers starting to evaluate their demand partners more strategically to ensure they have unique demand.
• Publishers utilizing both wrapper and S2S solutions to gain access to even more demand. I anticipate publishers will move demand partners in and out of each solution based on who is providing the most strategic demand.
• Advertisers/DSPs will evaluate their SSP partners holistically, and we will see advertisers/DSPs turn off inventory partners because there is too much inventory overlap and unnecessary fees.
• More SSPs will close their doors.

Looking for other Centro resources that will help you understand header bidding? Reach out to info@centro.net.