Back to Basics: How Does A Data Exchange Work? A DMP is an excellent system…
In the never ending talk soup of the AdTech ecosystem, our vocabulary doesn’t seem to stay stagnant for long. One hot buzzword on everyone’s lips these days is header bidding. In this edition of our Back to Basics series, we’ll break down what exactly header bidding is, and why it is important to care about.
Header bidding is an advanced programmatic advertising technique that serves as an alternative to the Google “waterfall” method. Header bidding is also sometimes referred to as advance bidding or pre-bidding, and offers publishers a way to simultaneously offer ad space out to numerous SSPs or Ad Exchanges at once.
Normally, when a publisher is trying to sell advertising space on its site, the process for filling inventory goes something like this:
First, your site reaches out to your ad server. In general, direct-sold inventory takes precedence over any programmatically sold options. Next, available inventory is served through the site’s ad server, such as Google DoubleClick in a waterfall sequence, meaning unsold inventory is offered first to the top-ranked ad exchange, and then whatever is still unsold is passed along to the second ad exchange, and so on. These rankings are usually determined by size, but the biggest ones aren’t necessarily the ones willing to pay the highest price. (For publishers, this means lower overall revenue if the inventory isn’t automatically going to the highest bidder.)
To further complicate the process, sites using Google’s DFP for Publishers has a setting that enables them to outbid the highest bidder by a penny using Google Ad Exchange (AdX). And since AdX gets the last bid, they are generally in a position to win most of these auctions.
Publishers end up feeling like they aren’t making quite as much money as they would without Google meddling in the bids.
So what does this mean? There are a few benefits for publishers:
In the never-ending quest for increased transparency and control over data and ad impressions, header bidding has become an interesting strategy. While it still proves to be a controversial method, many publishers have begun to embrace it for the promises of increased revenue and yield. What does the future hold for header-bidding? Only time will tell, but we do hope this helps in alleviating some of the confusion around its benefits.
Want to get back to the basics on some other topics? Check out a few of our other educational articles: