Introduction
The field of programmatic advertising has revolutionized how publishers monetize their content and advertisers access audiences. Originally, ad inventory was sold through a “waterfall” approach, where impressions were offered to demand partners in a fixed sequence, one at a time. While it was a straightforward approach, it often resulted in publishers not receiving the optimal price for their inventory; higher bid prices with lower-priority publishers likely went unnoticed altogether.
As digital advertising has progressed, publishers have sought to discover smarter, more efficient approaches that also provide more competition, transparency, and revenue opportunities. This led to one of the most significant innovations in advertising technology: header bidding.
Header bidding is a programmatic technique that allows several demand partners to bid on the same impression at once, even before the ad server is called. Header bidding creates a real-time auction environment within the browser header, allowing each bidder an equal opportunity to compete which ensures that publishers maximize yield, and advertisers gain improved access to premium inventory through an efficient ad management system.
What is Header Bidding?
Header bidding is a type of programmatic advertising technology that gives multiple demand sources, consisting of ad exchanges, SSPs, and DSPs, the opportunity to bid on the same ad impression at the same time, before the ads are sent to the publisher’s ad server. Rather than offering inventory sequentially, header bidding allows for a real-time auction in which each eligible buyer can see all the other buyers at the same time and compete. The best bid wins.
To understand how truly groundbreaking this is, you may want to picture the old, but very common, waterfall method that was used before header bidding was available. In a waterfall, the publisher would first offer the impression to its top-priority demand partner. If they accepted, great. If they declined or it was below a certain threshold, then the impression would “cascade” down to the second-most prioritised demand partner, and this would continue down the list. This process worked and was easy, but many times these highly valued impressions were just collected, but not sold. Advertisers could have delivered higher bids, but they were never even considered. Using a waterfall setup caused a loss of revenue and made it less competitive.
Header bidding allows us to look at it differently. It’s almost like an auction that happens before the real auction occurs – before the bidders even can compete in front of the auctioneer. Instead of inviting a bidder at a time in the real auction, header bidding offers the bidders the opportunity to be in the same room at the same time and compete in real time as the auctioneer’s hammer drops. This simultaneous bidding ensures publishers consistently secure the best possible price for their inventory while advertisers gain fairer access to premium placements.
How Does Header Bidding Work?
Now that we’ve answered what header bidding is, let’s look at how header bidding works in practice. While the underlying technology is complex, the process can be broken down into a few clear steps:
A user visits a publisher’s website.
As soon as a visitor arrives on a page, the publisher’s site loads in their browser, along with a tiny piece of JavaScript code that is placed in the head of the page, known as the header bidding wrapper.
Ad requests are made to different demand partners.
The wrapper is reaching out simultaneously to various demand partners (SSPs, ad exchanges, and DSPs) to submit their bid prices on the available ad impressions.
Demand partners submit the highest bid they can offer.
Each demand partner assesses the ad impression and submits the most competitive bid they are willing to pay, along with other details like the creative size, targeting, ad type, etc.
The winning bid is sent to the ad server.
Once all bids are received (usually in milliseconds), the winning bid is sent to the publisher’s ad server, generally Google Ad Manager, which will take this bid and essentially run two auction models, cycling out the winning bid to see how it measures against a “direct deal” and how it measures against other programmatic campaigns.
The winning ad is served to the user.
The ad server is now in charge of the auction and serves the creative from the winning bid in the right place with the appropriate post-ad impression experience.
Benefits of Header Bidding for Publishers
For publishers, one of the most effective ways to increase ad revenue and regain control of their inventory is by implementing header bidding. Header bidding creates competition and enables more transparency. Header bidding provides numerous benefits:
Boosting Revenue With Higher CPMs
The most significant upside to header bidding is its revenue impact, as multiple demand partners simultaneously compete for the same impression, which generates increased competition and, consequently, higher CPMs. Instead of receiving a lower bid from a single exchange, publishers are consistently able to receive the true market value of their inventory.
Improved Yield Management
Header bidding also improves yield management. With header bidding, publishers can evaluate the demand from multiple sources simultaneously. With real-time competition and bid discovery, publishers are better equipped to determine how to allocate their inventory and improve performance across multiple buyers.
Transparency Into Demand Sources
Waterfall setups largely masked who was bidding (and at what price). Header bidding, on the other hand, gives publishers insight into demand sources, bid values, and buyer behavior, putting actionable data in the hands of publishers to improve their monetization strategies.
Broader Access to Premium Advertisers
Publishing connecting directly with various SSPs, DSPs, and exchanges allows publishers to tap into a far wider group of advertisers; this includes premium buyers that would not be possible through a single platform.
Reduced Reliance on a Single Exchange
Finally, header bidding minimizes dependence on a single exchange like Google AdX. This diversification reduces risk, increases negotiating power, and ensures more stable revenue streams over time.
Challenges & Drawbacks of Header Bidding
While header bidding offers significant revenue and transparency benefits, it’s not without its challenges. Understanding these drawbacks is crucial for publishers considering implementation.
Increased Page Load Times (Latency Issues)
One of the main concerns with header bidding is latency. Because the process involves sending bid requests to multiple demand partners and waiting for their responses, it can slightly delay page load times. Even though this happens within milliseconds, excessive latency can impact user experience and, in turn, ad viewability and revenue.
Technical Complexity in Setup
Setting up header bidding is more complex than traditional waterfall configurations. It requires inserting code into the website’s header, integrating with multiple demand sources, and ensuring everything works seamlessly together. Publishers without in-house technical expertise may find the setup challenging.
Skilled Resource Requirements
Ongoing management of demand partners, including monitoring bid performance, troubleshooting issues, and optimizing auctions, requires dedicated expertise. Smaller publishers may struggle to maintain this level of oversight.
Potential Reporting Inconsistencies
Because header bidding involves multiple partners and platforms, discrepancies in reporting and attribution can occur. Aligning data across SSPs, ad servers, and analytics tools can be time-consuming.
Types of Header Bidding
In understanding how header bidding works, it is crucial to note that not all setups are equal. Publishers can choose from one of three distinct models, each with unique value and drawbacks.
Client-Side Header Bidding
In this model, auctions take place directly in the user’s browser with JavaScript. This method is more transparent and easier to debug, as all bid information is available in the browser. However, client-side bidding is dependent on the user’s device and can incur latency and longer page load times if there are too many demand partners/bidders.
Server-Side Header Bidding
In this model, the auctions take place on an external server instead of in the browser. This can provide faster page load times and lower latency, even when dealing with a high volume of bidders. The trade-off with server-side bidding is that it creates less transparency of bids and can cause slight decreases in bid response rates due to network hops.
Hybrid
In hybrid models, client-side and server-side setups are combined for the benefits of transparency, targeting, and scaling faster than client-side bidding alone. This approach provides a fair compromise, but it is the most complex setup overall.
How to Implement Header Bidding (Step-by-Step)
Now that you have the fundamentals down, you’ll learn how to execute header bidding successfully. While involved, complexity can be mitigated by taking a measured approach to implementation, and with some persistence will reward you.
Select a Header Bidding Wrapper
Start with choosing a reputable header bidding wrapper, a code/library that facilitates the communication between your site and your demand partners. Common options include Prebid.js, which is open-source and well supported, and Amazon TAM (Transparent Ad Marketplace), among others.
Bring the code into the header of your website
You should integrate the wrapper code into the header of your site. This action initiates the bidding process immediately after the page has loaded. We recommend using the async code format to ensure code doesn’t block other page elements.
Connect Demand Partners
Integrate your chosen SSPs, ad exchanges and DSPs with the wrapper. Each of those partners will have a corresponding adapter and configuration. Be sure to align the partners you are choosing with your audience and your inventory goals.
Set Price Floors and Timeouts
Be sure to code price floors so you don’t run the risk of underselling impressions, as well as timeouts (typically <1000ms) to avoid latency that impacts a user’s experience.
Test With Your Ad Server
Integrate your setup with an ad server like Google Ad Manager (GAM). Ensure that winning bids are correctly passed to the ad server and competing fairly with direct deals.
Monitor, Optimize, and Report
Once live, continuously monitor auction performance, latency, and partner response rates. Optimize settings, add or remove bidders as needed, and regularly review reports for discrepancies.
Popular Header Bidding Wrappers & Tools
When looking at header bidding, it is crucial to understand the tools that allow the implementation of header bidding. Header bidding wrappers and platforms help you integrate header bidding quickly, make code standard among multiple demand partners, and allow publishers to manage several demand partners efficiently. Here are a few of the most well-known tools available:
Prebid.js
Prebid, and Prebid.js in particular, is a common open-source header bidding wrapper. It is compatible with a multitude of demand partners, customizable from top to bottom, and there is a strong developer community. Prebid is often a preference for publishers wanting total control over auctions because of the customization and transparency it provides.
Amazon Transparent Ad Marketplace (TAM)
Amazon TAM is a server-side header bidding wrapper that allows publishers to monetize ad inventory against Amazon’s increasing demand pool. Compared to a client-side header bidding implementation, server-side headers provide lower latency and premium advertisers and quality demand not currently met by the dexterity of header bidding wrapper solutions.
Other popular tools:
There are several other tools for header bidding implementation/services like Index Exchange, AppNexus, and Rubicon Project. These tools often offer more features useful to publishers like further analytics, optimization of revenue, and easier bid management screen.
Benefits of Using Wrapper
Header bidding wrappers simplify implementation because the code is standardized, allowing publishers to move quickly without fully custom code to fit in each different demand partner. They also make auction management easier with fewer errors. Lastly, they provide detailed reports to give publishers useful information to optimize their monetization strategy. Optimize revenue more effectively.
Real-World Examples of Header Bidding Success
- Graphiq (Now part of Amazon): 40% Revenue Increase
Graphiq, a data visualization company, implemented header bidding in 2015 and experienced an immediate 30% revenue boost. With continued optimization, their revenue lift grew to over 40%. This success was attributed to increased competition for ad impressions and better yield management - BaoDongNai: 2X Ad Revenue & 32% Faster Page Loads
BaoDongNai, a Vietnamese publisher, adopted a comprehensive approach that included header bidding, Progressive Web App (PWA) technology, and ad format optimization. This strategy resulted in a 2X increase in ad revenue and a 32% improvement in page load speed, enhancing both monetization and user experience
The Future of Header Bidding
As digital advertising continues to evolve, the landscape of header bidding is poised for significant transformation. Publishers and advertisers are constantly seeking ways to maximize efficiency, revenue, and transparency, and several key trends are shaping the future.
- Server-Side Adoption and Hybrid Models
More publishers are embracing server-side header bidding or hybrid models that combine client-side and server-side auctions. These approaches reduce latency, improve scalability, and allow for more sophisticated auction strategies, making header bidding faster and more efficient. - Identity Solutions in a Cookieless World
With the decline of third-party cookies, publishers are exploring alternative identity solutions to maintain accurate targeting. Header bidding platforms are integrating with these solutions, enabling advertisers to reach audiences effectively while respecting privacy regulations. - Supply Path Optimization (SPO)
The rise of SPO is encouraging smarter, more efficient pathways for programmatic buying. Publishers and advertisers are focusing on reducing intermediaries, improving transparency, and ensuring the highest value impressions reach the right buyers. - AI and Machine Learning for Bid Optimization
Artificial intelligence and machine learning are increasingly being used to optimize bids in real time. These technologies help predict demand, adjust floor prices dynamically, and maximize revenue with minimal manual intervention.
Final Thoughts
Header bidding is a critical innovation, not just technical, allowing publishers to optimize revenue and transparency, and gain control over inventory. When multiple demand partners can bid in real time, every impression is able to generate its full market value, and the outcomes are shown to be superior to waterfall experiences.
Instead of just improved CPMs, header bidding allows better yield management, offers access to premium advertisers, and provides additional granularity into the bidding process. Implementation should be managed carefully, taking into account the wrapper, timeouts, demand partners and reporting.
Publishers should be investigating both client-side and server-side, as well as hybrid, header bidding, and complementing those approaches with experimentation to develop a desired performance, speed, and revenue model. Moving forward in a changing programmatic environment, header bidding is a key application to capitalize on monetization while sustainability and transparency are paramount. Integrating it into your ad management system ensures long-term efficiency and better control over ad inventory
Frequently Asked Questions (FAQ)
Q1: What is header bidding in simple terms?
Header bidding is a programmatic technique where multiple ad exchanges and demand partners bid simultaneously for the same ad impression, before the publisher’s ad server selects the winning ad. This ensures fair competition and helps publishers maximize revenue.
Q2: How is header bidding different from the waterfall method?
In the traditional waterfall method, impressions are offered to demand partners sequentially, one after another. Header bidding, on the other hand, runs all bids in parallel, allowing the highest bidder to win, which increases competition and revenue potential.
Q3: Is header bidding good for small publishers?
Yes. Small publishers can benefit from header bidding, especially when using wrappers like Prebid.js. While setup can be technical, even smaller sites can increase CPMs and access premium advertisers with the right implementation.
Q4: Does header bidding slow down websites?
It can introduce latency if not optimized. Publishers can mitigate this by setting timeouts, using asynchronous code, or leveraging server-side header bidding to maintain fast page load times.
Q5: Which companies provide header bidding solutions?
Popular providers include Prebid.js, Amazon TAM, Index Exchange, OpenX, Rubicon Project, and Xandr, among others. These tools simplify integration, manage multiple demand partners, and help publishers optimize revenue effectively.
