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Apr 30

What is: Header bidding?

In our latest installment of our “What is?” series, we’ll ease into the revolutionary topic of header bidding.

Header bidding is a technical optimization to programmatic advertising that enables publishers to offer their inventory to demand partners simultaneously, rather than sequentially, before sending the winning bid to their ad server.

…Can you repeat that?

Simply put: header bidding allows advertisers to bid on more programmatic inventory and win more auctions, where everybody bids all at once instead of having a series of auctions. It also helps publishers to control the real-time bidding process for the available ad inventory on their site(s).

It’s like a pre-negotiated auction where you get to see the items (ad inventory) before the auction, and only certain people (ad exchanges) are invited.

Although we’re all about simplification, header bidding – by nature – is a complex issue with many moving parts. Let’s break it down.

Key terms:

Waterfalling: Under this structure, the auction takes place in this order: First to direct deals, which may or may not receive the request due to pacing rules, and then to their non-guaranteed placements, such as private marketplaces (PMPs), ad networks, and ad exchanges.

Header bidding wrapper: Also known as a container, this is a piece of Javascript that “wraps” together ad requests and all partner bids within the header (<head></head>) of a website. Within 500-1000 milliseconds, the wrapper sorts these bids and selects the winner.

Browser or client-side bidding: Auctions are run and ads are called to a webpage directly using multiple javascript operations. All of these processes going on at once can increase page load time, which means that the more advertisers competing on a page’s header auction, the slower the ads load (which leads to slow pages overall.)

Server-side bidding: Off-page or server-side header bidding is faster than browser-side because it allows the auction process to happen outside of the publisher’s webpage and consolidates the ad calls. With this bidding process, the publisher chooses a server-side bidding technology partner to implement and host the solution. According to eMarketer, publishers are starting to use a hybrid browser and server-side bidding process.

Timeout: These auctions must be completed within a very small window so they don’t slow the page down. Most wrappers have timeout settings that allow the publisher to determine how long the auction should wait for each partner to return a bid before closing the auction.

Prebid: This is the most commonly used wrapper on the web. Prebid is a free and open source tech layer where companies can add their code to a foundation, ultimately making it easier to implement header bidding correctly.

Bottom line: Although header bidding isn’t a perfect system, it’s a much simpler way for publishers to control and optimize the ad space on their website(s).

Header bidding will certainly evolve over time as the system becomes smarter and more transparent, but for publishers, the maximized ad revenue, decreased manual work, and better reporting that comes along with it is worthwhile.

On a learning kick? Keep it up with this post on What is: A tag management system? And if you have a topic for a “What is?” post, email us!

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