The latest buzzword creating a noise in the digital advertising industry is header bidding, a programmatic technology already used by many publishers to make their digital inventory available to all sources of demand simultaneously before the primary ad server is called. 

Also known as tagless implementation or pre-bidding, header bidding replaces the traditional waterfall or daisy chain approach to programmatic trading and has significant benefits for both the buy and sell sides.     

So how does header bidding work and why is it such an important step forwards for the industry as a whole? 

Header bidding requires a piece of code to be inserted into the header of a webpage. This code calls demand sources such as supply-side platforms and ad exchanges for dynamic bids prior to the page loading. The highest bids are then included in the auction when the publisher’s main ad server is subsequently called. 

Implementing these header integrations can be a complex time-consuming process, and adding too many demand partners to the header can increase complexity. However further solutions are already being developed to make the process quicker and simpler, such as header bidding wrappers which organise demand sources before they enter the ad server. 

Benefits of header bidding for the sell side

As a practice that allows publishers to make their inventory available to all potential demand sources at the same time, header bidding increases competition for impressions which maximises ad revenues. Publishers no longer need to predetermine the order in which demand partners gain access to their inventory and they are able to gain a clearer understanding of the true worth of each impression. 

Reduced wastage is another benefit of header bidding for publishers. It limits the risk of unsold impressions and – as demand partners have already indicated their interest in the impression – it eliminates passbacks where impressions are redirected to the ad server for reallocation if the floor price isn’t met. In addition header bidding reduces latency by getting rid of the time consuming waterfall process. By shortening load time, the technique also improves a publisher’s SEO ranking. This is because site speed is one of the key signals used by Google’s algorithm to rank pages. 

Benefits of header bidding for the buy side

While the header bidding process chiefly appears to favour the publisher, there are also several advantages for those on the buy side. It is the first opportunity marketers have had to take a first look at publisher inventory in an RTB environment, and can be used with various programmatic models such as private exchanges enabling increased access to premium inventory. 

In contrast to the waterfall approach, where demand sources are invited to bid in order of priority, header bidding means they receive a bid request for every single impression. This increases transparency and provides a much fuller picture of available inventory, allowing marketers access to the placements that will best reach their specific audiences. As inventory is made available across a variety of marketplaces, marketers also have the option to buy impressions via multiple channels. 

With header bidding demand partners bid simultaneously rather than sequentially, with no bias to any particular source, allowing different direct and indirect demand to compete on a level playing field. This is a significant step forward for programmatic and will drive increased adoption of automated media trading.  

Header bidding is already having a substantial impact on the industry and this shows no signs of slowing. Through its widespread use publishers can maximise yields, marketers can access more inventory, and the industry as a whole can take strides towards a more transparent, fully programmatic future.