Header Bidding: 3 Things Marketers Should Know

As publishers seek to better control ad inventory and improve yield, header bidding is on the rise in the digital media industry. Yet, surprisingly, less than half of U.S. agency and marketing professionals truly understand what header bidding is, its implications, and how to make it work in their favor, according to eMarketer’s Header Bidding for Ad Buyers: What Brands, Agencies and Buy-Side Platforms Need to Know: Our COO Jay Friedman recently contributed to this all-encompassing report on the state of header bidding, and here are 3 things every marketer should know:

1) What Is Header Bidding?

Header bidding is a common programmatic technical hack among publishers and non-Google supply-side exchanges that gives a publisher better prioritization in Google’s DoubleClick for Publishers (DFP) waterfall. It’s called header bidding because publishers offer ad space to ad buyers by placing a piece of JavaScript code in their site’s webpage header, the invisible space at the top of every page that stores styling – how a webpage should be rendered. Both publishers and ad buyers can benefit from header bidding. For publishers, it can help them access more advertisers, gain greater control and efficiency, and earn more money. For ad buyers, the technique can give them access to more and higher quality ad impressions and more data to improve inventory forecasting and campaigns.

2) How Does It Work?

A publisher places a piece of JavaScript code in their webpage header. Once the code is in place, when a visitor enters the publisher’s URL in their address bar, the code requests all demand sources (advertisers) within the header to place bids to display an ad in one of the various elements and locations available on the publisher’s webpage. The publisher’s ad server selects the highest bid for each ad impression, and the site loads in the content and advertising to appear on the page to the website visitor.

3)How It Could Affect You as a Buyer?

Ad Prices Are Rising. Due to heightened demand for inventory, the competition is getting stiffer for ad impressions, sending prices soaring. Our COO Jay Friedman said he’s already seen desktop and display ads increase 100% to 200% in some cases, a good amount he attributes to header bidding’s influence. Jay also said many marketers are burying their heads in the sand, content to buy worse inventory instead of going back to clients to discuss the necessary programmatic price increases needed to buy quality inventory. But these conversations are important to have so you can revise media plans and metrics to ensure digital ad campaign performance won’t suffer. Infrastructure Demands Are Increasing. Demand-side platforms (DSPs) are facing more bid requests per second (also known as weight). Since they typically work with many supply-side platforms (SSPs) at once, sometimes they get multiple bid requests for the same ad impression. Not only does this cause confusion, this duplication along with higher bid volume are driving up DSP’s ad-serving costs and forcing many to pay for ad tech infrastructure upgrades to keep up. In fact, here’s what Jay had to say on the topic in eMarketer’s report: “There aren’t any more ads for sale, but DSPs are dealing with sometimes 10 bid requests for one ad,” said Jay Friedman, partner and COO of programmatic ad buying and planning firm Goodway Group. “And taking into account flex ad formats, a page could generate 120 bid requests for four ads. It’s out of control, and there are less than five DSPs that can shoulder this kind of weight with their infrastructure.” This will help put bid volume in perspective: According to Jay, two or three years ago, DSPs received about 1 to 2 million bid requests per second, but this may balloon up to 9 million by the end of 2017. Auction Practices Are Changing. Private marketplace (PMP) and direct deals no longer guarantee the same privileges, especially with a greater number of publishers adopting header bidding to chase more money. You can no longer assume you will automatically get the preferential treatment and premium inventory you did before. Also, first-price auctions are starting to replace second-price auctions, and this trend is shaking up auction rules and pricing expectations ad buyers previously followed. Having to navigate this new normal, it’s much tougher for ad buyers to even know what to bid, let alone successfully strategize and optimize for great campaign performance. With header bidding becoming more popular across our industry, now’s the time to embrace change when it comes to the shifting digital media marketplace. Talk to your clients about rising CPMs, how you can get them more value. Revise your bidding strategies and ad practices on your programs. Vet your programmatic partners and retain only those that are trustworthy, those that can offer the best scale, access, inventory and insights. And if Goodway can help you run programmatic campaigns, please contact us today.