Boosting advertising ecosystem efficiency with header bidding

08 Feb 2023
Boosting advertising ecosystem efficiency with header bidding

It’s been a long, long time since it was enough for the advertisers to buy ad space in some fancy offline magazine everyone read to drive their brand awareness to the skies. Some might say those were better, simpler times, but not us at DecenterAds. Where’s the interest in that? Modern media buying with all its wonderful complexity and smart tech is way more fun. Not to mention that it’s way more effective in analyzing audience signals, behavior, and interests, thus providing exponentially greater results. 

Yet, the world of programmatic advertising with all its different tools and new technologies can be tricky to understand. No worries! Let’s dive in and set the record straight once and for all!

RTB was the first attempt to automate and perfect programmatic media buying

RTB, which stands for real-time bidding, allowed advertisers to can take part in auctions for available display placements. As soon as the impression becomes open, the auction starts, and the bidders one by one can present their offers. The first offer to meet the floor price from the publisher wins and is displayed on the website or app. 

Technology reduced this entire process to a few fractions of a second – hence the name “real-time” bidding. Everything starts and ends while the user is downloading the page. 

Depending on the openness of the auction, two types of RTB programmatic media buying models can be distinguished: 

  • open exchange, which happens publicly and is available for all advertisers without exceptions. Though democratic, it’s often considered the least premium of all programmatic deal types;
  • private marketplace or PMP RTB, which happens privately and includes only eligible advertisers for participation. Highly exclusive, it includes deals with premium ad inventories. 

For a long time, RTB was the most effective way for advertisers to get the most relevant inventory. However, today there is an even more modern and efficient way to buy ads – header bidding. 

Header bidding is a game changer in programmatic media buying

Header Bidding offers another way of conducting RTB auctions. Its key difference from classic RTB is that it allows publishers to send bid requests to several ad exchanges at the same time; the highest bid wins regardless of its place in the queue (as there is simply no queue).

This has solved the biggest issue of traditional RTB’s waterfall bidding structure, in which the first bid to meet the floor price would win – regardless of whether it was actually the best deal. It greatly increased both the profit of all participants and the transparency of the whole process.

How does it work?

Header bidding starts with publishers copypasting the special code in the header of the page (hence the “header” bidding name). It sends the call to the demand side the moment when the user starts to load the page. Advertisers bid their offers, which are then transferred to the publisher’s ad server. The highest offer is declared a winner and gets to show the creative on the page. And – same as with classic RTB – the whole thing takes up no more than a few fractions of a second. 

prebid.js, an open-source solution that simplifies the implementation of header bidding on publishers’ websites and mobile apps, is traditionally used for header bidding.

Benefits of header bidding

There are many benefits to the newest RTB technology. 5 key factors are worthy of a highlight: 

  • More transparency in the bidding process. Header bidding allows publishers to control a list of sources that are eligible for participation. Even better, some advertisers can be prioritized to create a trusty network of reliable and transparent partners.
  • No technical limitations for bidders. Whoever can offer good inventory, can participate and have an equal chance of winning. This allows to diversify and enrich the pool of advertisers and get the best inventory in the end. 
  • Diversity promotes competition, which increases ad quality. Unlike the old ways, today whoever can offer good inventory, can participate and have an equal chance of winning. This allows for diversification, enriches the pool of advertisers, and provides the best inventory in the end. 
  • Revenues from header biddings are higher. With the publisher’s inventory available to more advertisers, CPM indicators and, subsequently, revenue increase quite significantly: case studies show growth up to 30-40%
  • Simultaneous auction is even faster, which decreases load time. That, in turn, contributes to better user experience and search engine results. 

Technological programmatic advertising solutions, without a doubt, will become more and more demanded and popular among both advertisers and publishers. At the moment, header bidding is one of the most relevant and efficient ways to boost the whole advertising ecosystem. And whatever comes next, we can be certain that it will be even faster, smarter, quicker, and even more automated. 

Stay tuned with DecenterAds blog to be the first to learn about new interesting features in digital advertising!

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