When header bidding first rose to prominence in 2015, it promised publishers the ability to understand the true market value of their advertising inventory. Now, two years on, it would be an understatement to say header bidding – also known as prebid – has had a profound impact on the digital marketplace. As publishers adopted header bidding in increasing numbers, they saw greater yields and gained unprecedented insight into the worth of their inventory.

Over time, technology vendors and publishers worked together to refine the header bidding process further, building new tools that made prebid setups faster, easier to manage, and available across new formats. With each improvement, publishers saw better results, and adoption of header bidding grew.

Today, header bidding is employed by many of the world’s top publishers. Despite how much the technology has evolved in the past two years, there is still more change on the horizon to include more formats and further improve user experience.

The expansion of header bidding into new territory

Until recently, header bidding was almost exclusively used for selling web display inventory. Now, brands are increasingly shifting budgets towards emerging formats that deliver more relevant and targeted ad experiences. And as publishers grow comfortable employing header bidding, industry advances are making it possible to bring the technology to video and mobile apps.

Digital video

Digital video is the hottest format in advertising, and it’s not hard to see why. With each passing year, consumers spend more time watching video, and brands are following the eyeballs.

According to eMarketer, adults in the UK will spend an average of 53 minutes per day watching digital video in 2017 – more than double what it was five years ago. By 2019, almost 20% of a person’s daily time spent with digital activities will be devoted to video. Driven by the popularity of video streaming services like Netflix and BBC iPlayer, as well as the growth in use of smartphones and tablets, advertisers are looking to capitalise on this popular format.

By adding header bidding to their strategy, publishers are likely to see three major benefits. The first is superior monetisation. The lion’s share of video sold programmatically is currently distributed using the same antiquated waterfall process that hindered publishers in the display market. Indeed, the traditional waterfall system prevented publishers from finding out how their demand partners really valued their inventory by showing bids one at a time, in asynchronous order. Since partners lower down the chain frequently missed out on the opportunity to submit bids, it was impossible to know what they would have been willing to pay for impression – and it may have been higher than the winning bid.

By opening auctions to every demand partner a publisher works with, header bidding enables publishers to increase competition and drives CPMs even higher. The added competition also gives publishers a better sense of what their video inventory is worth on the open market, allowing them to negotiate better direct-sold deals.

The second benefit is lower latency, which is especially critical for video publishers, as viewers are likely to exit the page if videos load too slowly. Though load times have improved in recent years, user experience on video is frequently undermined by the publisher waterfall setup. Header bidding replaces the waterfall with a single, simultaneous auction across all programmatic demand partners and gives publishers the opportunity to set global timeouts across their header bidding partners, ensuring that the auction is capped at a time that doesn’t impair user experience.

The final advantage is greater transparency – but it comes only through using a header bidding solution that is open-source, like Prebid.js. By opting for an open-source wrapper solution, publishers can monitor and even contribute to the header bidding auction logic themselves. Community-supported, open-source solutions give publishers the confidence that they are getting the highest possible yield, on an even-playing field.

Mobile app usage

As smartphone and tablet use becomes increasingly prevalent, app usage is seeing a massive jump, too. No longer needing a web browser to navigate to separate sites, apps let users bookmark their favourite digital destinations. Indeed, the latest research shows UK adults spend an average of 1 hour and 55 minutes on mobile apps as they continue to drive mobile internet usage.

For advertisers, in-app provides superior targeting across the board, while standout formats like in-app interstitial deliver near-guaranteed viewability. For publishers, the right prebid setup builds a larger and more diverse demand pool, with access to big brands and global advertisers. By expanding the number of partners who can bid on in-app ad units, header bidding can increase a publisher’s incremental yield by 15%.

Secondly, in a world where apps see an almost 80% drop off of users within three days of download, the importance of a quality user experience cannot be overstated. But when app developers try to sell their inventory programmatically today, their users often encounter slow load times while impressions are passed back and forth during the waterfall process. By offering inventory directly to exchanges, mobile header bidding eliminates mediation and creates a much faster mobile app.

As such, it’s not just about monetisation – header bidding could provide the retention boost to make an app even more successful.

What’s next for header bidding?

The goal for header bidding remains the same from when it was first developed – to enable publishers to open their inventory to the full scope of market demand and improve yield by returning CPMs that accurately reflect the true worth of ad impressions.

Ultimately, header bidding is creating a better internet for everyone. As technology improves and adoption rates increase, we expect header bidding to become a growing part of a more robust digital marketplace – one where publishers get fair, market-determined prices for their impressions and where advertisers can deliver relevant ads to the right audiences. By providing superior results for advertisers, this marketplace will encourage greater investment from brands, giving digital publishers more money to produce the quality content consumers desire.