2. 2
Publishers should implement header bidding to advance their
programmatic maturity
Header bidding is simple – instead of running exchange partners through a waterfall in order to sell an
impression, publishers surface the impression to all sources of demand simultaneously. The highest bidder
wins and then signals to the publisher ad server that an ad has been sold. We think header bidding is a
significant innovation to the ways programmatic auctions are run that will provide both the buy and sell
sides with value.
It allows the buy side to act on audience first strategies:
Before header bidding, a buyer’s ability to compete for impressions dependedon their position in the
waterfall. Header bidding has leveled the playing field and provided buyers with:
• Full visibility into publisher inventory. Header bidding consolidates all demand, so advertisers
see all inventory a publisher is selling. This allows them to better understand a publishers’
marketplace. Instead of getting blindly led to one section of a supermarket, advertisers can now
peruse the whole store.
• More opportunities to reach specific audiences. The waterfall can cap the number of
impressions an advertiser can buy, so if they are targeting specific audiences they might not have
as many opportunities to reach them. Let’s say an advertiser really wants to buy “green moms” and
a publisher surfaces 100 green moms to programmatic channels. That advertiser might only see 3
of those 100 “green moms” because of her position in the waterfall. With header bidding, the
advertiser will see all 100, and have the opportunity to buy each of them.
• The ability to pay the real time value of a user. The floor prices of waterfall auctions signal value
to demand, which can influence the bidding behavior of a demand side platform. With header
bidding, floor prices are obsolete, so impressions are priced based on how valuable they are to an
advertiser. The advertiser has more control over pricing and can use price control to secure the
impressions they are in the market for.
It supercharges the publisher’s programmatic marketplace
Header bidding simplifies the publisher’s auction environment and helps publishers understand the true
value of their inventory. In time, this information will help publishers shape their programmatic strategy.
Header bidding also:
• Eliminates the technical complexity of the waterfall. In a waterfall set up, publishers typically
have to run multiple auctions. Each auction takes time, requires multiple technical processes to
run, and can end up costing the publisher. With header bidding, the auction kicks off right as a user
is loading their browser and runs until an ad is sold. It eliminates pass backs, which often cost
publishers in both fees and impressions.
• Improves user experience by decreasing latency. Ask any digital publisher and they’ll tell you:
3. 3
the amount of time a user has to wait for a page to load negatively affects user experience and
audience retention. Tag-based, or waterfall, run auctions significantly slows down a page load. We
examined latency across two different auction environments and found the following: 98% of
header tag run auctions are complete in 200 milliseconds or less, while 58% of tag-based, waterfall
auctions take place in 400 milliseconds or more.
• Increases yield. Header tag adds more bid density to a publisher’s ad stack, which drives up
demand and thus, the clearing price for the media. We compared average CPMs for digital display
in a waterfall environment to average CPMs with header across Q2 2015 and found that header
CPMs outperform waterfall CPMs in open exchanges by 166% and by 46% in private exchanges.
4. 4
Taking a look at the data
Source: Index Exchange, marketplace data Q2 2015
Figure 1: Average digital display clear price by marketplace type (relative)
Source: Index Exchange, marketplace data Q2 2015
Figure 2: Header tag spend relative to tag-based spend is sizeable
93
35
100
69
Header Auction Non-Header Auction
Open Market Private Market
100 100
8
30
Won Impressions Total Revenue
Standard Tag Header Tag
6. 6
Questions to Ask of Your Header Bidding Partner and Why They
Matter
Question Why it matters
What is your process for
implementation?
There are two components to header bidding
implementation: web development and ad server
configuration. As header bidding requires code to be
added to a site, and changes for the purposes of
advertising are rarely prioritized, it can help your team
significantly if you find a provider who is willing to make
the change on your behalf and customize it to meet your
needs. The second component, ad server configuration,
requires your header bidding provider or your ad ops
team to manually enter line items in your ad server. The
more granular these line items are, the better you'll
activate demand at its true value.
Is your tag asynchronous or
synchronous?
An asynchronous process allows for simultaneous
processes to take place on your site at one time. In the
case of header bidding, asynchronous processes help
ensure page content loads without blocking, impression
loss, and protects the user experience. Require a header
bidding solution that functions asynchronously.
What is your data center footprint
globally?
It's important to find a provider that has a well
distributed and significant data center footprint. It
protects against latency and ensures that your header
bidding partner can support traffic and source demand,
quickly, across the globe. If your audience is global, your
partners need to be too.
What are your sources of demand and
how unique are they?
Make sure your header bidding provider has carved out
unique partnerships with demand sources. If they have,
there is an ability to access truly unique budgets that may
live in private exchanges, or specific trading desks. Also
press your header bidding provider for full fee
transparency -- if they are taxing you for access to
demand, it's important for you to know.
How agnostic is your header bidder
toward tag management solutions and
ad servers?
Determine if the tag is engineered to perform better with
a certain ad server or tag manager. It's best to have a
header bidding partner that has experience working with
multiple container and serving technologies and can
understand how to troubleshoot in a multitude of ad
technology portfolio environments.
Is there an in-house team to support
technical troubleshooting and
engineering?
Figure out the internal resources your header bidding
provider has directed toward managing the technical
work behind your integration. This will show you how
dynamic it is and how much support is allocated to
making sure header auctions are running smoothly and
effectively.
7. 7
Can you provide a mediation layer to
support multiple header tags?
Many publishers work with multiple header bidding
solutions to ensure their impressions are sourced to
different types of unique demand. In doing so, latency
can become a serious issue. Determine if your provider
has the ability to provide a mediation layer that functions
as a container tag for all of your header bidding
integrations. If the solution is complimentary, even
better.
If so, is the mediation layer agnostic to
all other demand sources?
Determine if your provider's mediation layer will play
nicely with all exchange partners. If you're working a
header bidding provider who also functions as the
mediation layer, make sure it's a neutral.
Conclusion: Header Tag will catalyze an update to publishers’ ad stacks
Thanks to growing sophistication on the buy and sell sides and a universal desire to improve the efficacy of
digital display advertising, a change is underway inthe digital display market. We think header bidding is a
necessary step toward advancing programmatic strategy. As more and more publishers begin to
implement header bidding, create more premium ad experiences (and fewer of them), and sell viewable
impressions only, there will be more competition for fewer impressions. Concurrently, the buy side wants
to make sure they are reaching high quality audiences for their advertising and will be willing to pay to get
their ads in front of them. Publishers should experiment with flipping their ad stack once they’ve
implemented header – it gives them a chance to sourceprogrammatic, open market demand first, which
will help them realize the true value of their programmatic inventory.
1
http://digiday.com/publishers/wtf-waterfalling/