(VIDEO) What is Header Bidding? The Definitive Ad Tech Guide 2022

Header bidding programmatic technology enables publishers to simultaneously offer their ad inventory to multiple ad demand sources, increasing ad revenue. Keep on reading to learn how you can benefit from this technology to boost your display advertising revenue dramatically.

What is Header Bidding?

Header bidding is a programmatic advertising technology that lets publishers simultaneously offer their ad inventory to multiple SSPs, ad exchanges, and ad networks. It’s an alternative to the historical “waterfall” method and is sometimes referred to as advanced bidding, pre-bid, or pre-bidding. Header bidding works by letting multiple advertising demand sources bid on the same ad space at the same time. This enables publishers to increase their yield, cost-per-mille (CPM), and generate more ad revenue with header bidding.

Publishers traditionally used the following waterfall process to sell advertising space (ad inventory):

• The publisher sets a floor price for their ad inventory
• The website sends an ad request to the ad server
• Direct-sold ad inventory takes precedence over programmatically sold ad inventory
• Available ad inventory is then passed to the website’s top-ranked ad exchange, such as the Google DoubleClick Ad Exchange (now Search Ads 360). If the floor price is exceeded, the inventory is sold
• Inventory that remains unsold is then passed to a second-ranked ad exchange or ad network
• The various ad exchanges and ad networks in the sequence were usually ranked according to which pays the most for ad inventory or ad size

The waterfall process was not efficient because it often sold a publisher’s ad inventory for less than it was worth. Since advertisers couldn’t bid against each other simultaneously, the ad inventory was sold to the first advertiser with a bid that was higher than the publisher’s floor price. In addition, it took more time to pass the ad inventory to the exchanges one by one.

When publishers switch to header bidding solutions, all advertisers are able to bid at the same time in a transparent, open auction. The highest bid is therefore easy to identify and select. As a result, publishers are able to maximize ad revenue within this system. This header bidding case study shows how the process works.

“Header bidding gives publishers access to better integration with revenue partners and ad tech companies compared to the previous waterfall or daisy chain system. Thanks to these improvements, header bidding can significantly increase ad revenue for publishers. The technology is continuing to evolve which is why we’re seeing record-high adoption numbers.” said Snigel Managing Director, Peter Gallagher.

Header Bidding Tools

Google Ad Manager is the most popular and dominant ad server used in header bidding. If you have a Google Ad Manager account in good standing, and you meet Google’s criteria for entry, you could be invited to Google Ad Exchange (Google AdX). This is Google’s premium advertising ad exchange where publishers can receive even higher rates for their ad inventory and access campaigns from premium brands. Popular header bidding tools include:

• Google Ad Manager
• Google DoubleClick (now Search Ads 360)
• Google Ad Exchange
• Google Open Bidding
• Prebid.js
• Amazon Transparent Ad Marketplace (TAM)

How does Header Bidding work?

Publishers need to place a JavaScript tag in the website’s header, this is how the name ‘header bidding’ came about. This tag or header bidding wrapper allows the publisher to create an open auction and invite multiple demand partners such as Rubicon, AppNexus, and Pubmatic to bid.

When a user lands on the website, an auction is initiated and an ad request is sent to the advertising demand partners with details about the user, the webpage they have landed on, and the ad units on the page. From there, advertisers can decide in real-time how much they are willing to bid based on the information in the ad request.

Most header bidding solutions are built on open-source software from Prebid.js. However, header bidding companies have introduced significant improvements to Prebid.js in recent years. This enables them to deliver more than if a publisher were to use Prebid.js directly. As a result, the most popular method for implementing header bidding is to use a header bidding company like Snigel which will take care of the implementation and administration work. Some large corporations prefer to create their own header bidding setups in-house as they have access to teams of ad tech developers and advertising operations staff.

Header Bidding Explained

The header bidding process works as follows:

• A visitor clicks on a website, and the page loads in their browser
• The short string of JavaScript in the website’s header, the header bidding wrapper, calls several ad networks
• Each ad network places a bid on the inventory
• The highest bid wins the auction
• The winning bid is passed to the publisher’s ad server
• The publisher’s ad server connects the user to the advertiser’s server
• The winning ad creative is displayed to the user

This entire process happens within milliseconds! You can see why it is sometimes called “pre-bidding,” as the auction is relocated from the ad server onto the header of the publisher’s webpage.

What is the difference between Client Side Header Bidding vs. Server Side Header Bidding?

The first header bidding systems created an auction within the user’s browser (Client Side) which requested bids from multiple advertising demand sources. However, latency increased as more SSPs and ad exchanges were added to the auction. Server side header bidding (S2S) was established to combat this latency.

Server-side header bidding allows the auction to occur outside of the user’s browser. This reduces the number of ad calls going to and from the web page. Instead, the auction is held after one call is made to an external server. This results in faster page load times and lower processing power requirements which improve the user experience.

What Is Waterfall VS Header Bidding?

The waterfall system passed ad impressions to ad exchanges one by one until the floor price set by the publisher was exceeded. In contrast, header bidding creates an open ad auction where ad exchanges can simultaneously bid on ad inventory. While the waterfall system allowed publishers to connect to multiple ad exchanges and advertisers, it was ultimately inefficient for all parties since the highest bidder didn’t always win.

The main issue with the waterfall system was that when anyone further down in the bidding process was willing to offer more money, they would not get the opportunity if the inventory was sold beforehand. Another problem with the waterfall system was that top-ranked ad exchanges usually got the first opportunity at a bid. Unfortunately for publishers, the ranking system was often determined by the size of the network rather than the amount they were willing to pay for a bid, resulting in a lower yield for the publisher.

In contrast, header bidding provides all ad exchanges and advertisers an equal opportunity to bid on (premium) ad inventory, resulting in higher competition and increased revenue for publishers. As a result, header bidding is one of the most significant technological breakthroughs for publishers and advertisers.

When Did Header Bidding Start?

Header bidding was developed in 2014 as a solution to the shortcomings that came with the Real-Time Bidding (RTB) waterfall approach and as a way to combat Google’s competitive advantage in the market. To clarify, Google’s ad server favored its own exchange, which limited publishers’ revenue and exposure for advertisers. For the first year, the programmatic technique did not have the generic name “header bidding” as we know it today. It was called tagless, pre-bidding, full bidding, parallel auction, and many other words by various vendors. In 2015, AdExchanger wrote an article on the rise of header bidding, and the term became widely accepted. Finding a common name made a massive difference in the industry as it was easier for publishers, advertisers, and vendors to communicate and implement a solution. As a result, header bidding adoption spread like wildfire.

Is Header Bidding Good For Publishers?

In general, header bidding increases ad revenue for publishers. As a result, header bidding has grown in popularity in recent years. Research shows that 79% of the top 1,000 US websites (as ranked by Alexa) use header bidding instead of the legacy “real-time bidding (RTB) waterfall” method or AdSense. Read our in-depth comparison between AdSense and header bidding to learn more about the differences.

While header bidding is not a perfect solution, it is the best solution available for publishers right now. Header bidding has created a more sustainable and transparent advertising ecosystem which has benefited both publishers and advertisers. We’ve broken down the pros and cons of header bidding below.

What Are The Benefits of Header Bidding For Publishers?

• Increased Revenue. The most critical benefit to publishers is that they make more money than they would when using AdSense or the waterfall system. You can get an idea of how much your website could earn with header bidding by using this AdSense revenue calculator tool. It’s not uncommon to see an increase in revenue between 30% and 70%, with some publishers seeing even more than that. You can read about a real-life example in this header bidding case study.
• More control. Publishers can choose which demand partners to add to their header bidding auctions. This improves ad quality as a publisher can handpick the best ad exchanges, SSPs, and ad networks for their website.
• More competition. Advertisers have to pay more to outbid each other and win impressions. More buyers equal more competition and higher CPMs. As a result, website owners get more money for their ad inventory.
• Easy to manage. If you’re working with a credible adx partner or header bidding partner, you can plug and play without worrying about the administration of managing and updating your own solution.
• Better visibility for advertisers. Buyers can see the publisher’s inventory available, meaning a better opportunity to win premium inventory compared to the old RTB waterfall auction.

The Cons

• Most publishers need help with implementation. The technology behind header bidding is complicated – there is no denying that. But many ad tech businesses like Snigel have devoted their time to perfecting the technology so that publishers don’t have to.
• Page load times. Core Web Vitals are a common concern for publishers looking to use header bidding but will vary depending on the solution a publisher uses. Header bidding solutions like Snigel’s AdEngine use asynchronous loading so page load speed is not negatively affected.
• It may take a few weeks to see an impact. Some publishers even find initial losses in revenue. However, a good header bidding company will optimize performance by adding more demand partners and creating a bespoke setup for the publisher in Google AdManger.

Is Header Bidding Good For Advertisers?

Advertisers benefit from header bidding as they gain access to higher-quality placements. Additionally, header bidding increases the reach of advertisers by exposing them to a larger target audience.

What Are The Benefits of Header Bidding For Advertisers?

• Disintermediation. All advertisers have the same chance to win the best inventory regardless of whether they use AdX or not. Everyone has equal access!
• Maximum Transparency. Header bidding gives advertisers access to all the publisher’s inventory, so they know what’s available at what price. Previously advertisers could only see the inventory that was offered to them during the waterfall auction process.
• Better Inventory. All advertisers can bid on premium inventory if they bid high enough.

How Do You Implement Header Bidding?

Publishers have to place a piece of JavaScript code into their website's header section to implement the header bidding wrapper. This code is used to trigger the auction when an impression appears.

For publishers that have the technical knowledge, time, and experience to take care of the header bidding implementation themselves, prebid.js is the most suitable solution. We will look into what Prebid.js is and the pros and cons of using it in the next section.

Header bidding can be time-consuming and complicated to implement because:

• The solution requires a developer to implement it effectively
• Constant updates are necessary as the industry is rapidly evolving
• Individual accounts need to be created and maintained for all demand partners
• Advertising operations expertise are needed to maximize price rules and ad layout
• It can be challenging to consolidate revenue from all involved parties

As a result, it is generally more effective to use a managed service provided by an ad tech vendor, like Snigel.

What is a Header Bidding Wrapper?

A header bidding wrapper is a JavaScript tag placed in the header of a page that provides access to multiple advertising demand partners and rules for profitable Real-Time Bidding (RTB) ad auctions. The header bidding wrapper lets publishers add or remove an advertising demand source flexibly without altering the website’s code. In addition, the wrapper enforces timeout settings (the amount of time bidders have to respond) and triggers the asynchronous call for advertising demand partners to submit bids.

Without a header bidding wrapper, a publisher would have to manually replace the old header tag with a new header tag every time an update occurs. Furthermore, publishers would have to add and remove individual tags on the page for each demand partner. Overall, the header bidding wrapper provides an efficient structure for creating an ad auction.

What is Prebid.js?

Prebid.js is a popular open-source header bidding platform for the web that enables publishers to set up line items and manage multiple, asynchronous ad calls with an ad server. It includes demand sources and analytics adapters. It supports currency conversion, GDPR, common ID systems, and multiple ad servers. Prebid is a sophisticated technology that is designed to be used by ad tech developers.

The Pros of Using Prebid.js

• Prebid.js is open-source and free to use. If you have the development and ad ops skills required, prebid.js can help you avoid sharing revenue with a third party
• Resources and Community. While there is no official support, prebid.js comes with a resourceful community that can help with questions you might have
• Access to analytics. The system provides information about what is working well and whether there are any partners that you can exclude from the wrapper
• Adaptability. Prebid.js works for both mobile and desktop, making it suitable for publishers that need both
  Fast Auctions. Header bidding auctions with prebid run fast and include over 300 demand partners

The Cons Of Using Prebid.js

• Complexity. Installing and setting up Prebid.js requires extensive technical knowledge. If you do not have the time or an ad ops team to take care of the implementation and maintenance, you won’t be able to use it without external help.
• Slower page load speed. Prebid.js runs the header bidding auction on the client-side, which inevitably causes a delay for the user and decreases page load times.
• No designated support team. Being able to ask questions in a forum or group of people that use a similar setup to you can be helpful, but sometimes you need expert support for your specific requirements.

Given the complexity of implementing and maintaining the Prebid.js wrapper, integrating header bidding without a third-party is not for every publisher. It is best to determine if you have the appropriate resources before deciding whether prebid.js is the right solution for you long-term.

Choosing A Header Bidding Company - What Factors To Consider

If you do a Google search for ad monetization or adx partner, you’re going to get hit with loads of results. How do you tell those companies apart and decide which one is best for you? Ad revenue is usually a publisher’s livelihood, so finding a third party to manage it is a huge decision, and you shouldn’t make it lightly.

Header bidding companies have been pouring everything into perfecting their ad monetization technology to ensure you get the best results. But be careful – not all ad monetization businesses are created equally. Many offer the same basic services, but the details matter most, like payment terms and service levels.

Another benefit of using an outsourced header bidding solution is that many work on a revenue-sharing payment setup. This means it is in their best interest to provide publishers with the best ad yield possible, so you both win.

While publishers are giving up a portion of their ad revenue in exchange for help, they can generally see a net increase in revenue that would not be possible without using a third-party service. This is because third-party businesses generate enough overall volume to form valuable relationships with high-quality advertisers and network partners that the website couldn’t usually access as a small to medium publisher. Not to mention, the monetary and time investment to use header bidding without a third-party partner is significant.

What Should You Look For In A Header Bidding Company?

Here are the top factors to consider when looking for a header bidding company:

• Do their products provide what you need? Some only offer header bidding, while others have additional functionalities like consent management, programmatic deals (case study here), the ability to serve ads without user consent, and video ads.
• Does their business model work for you? Some businesses offer more of a plug-and-play solution, while others approach their clients with a full-service consultancy approach. Which do you prefer?
• Which Demand-Side-Partners (DSPs) do they work with? The number of DSPs and partners in the auction has an impact on the revenue you receive. The more DSPs there are, the more competition and revenue there is. We recommend that you select a platform that offers a large number of out-of-the-box DSPs.
• What are your priorities for your site? For example, one ad tech business might focus solely on revenue. Another may pay more attention to user experience and site speed. The latter is reflected by how well the company is equipped to help you achieve good Core Web Vital scores and fix First Contentful Paint (FCP), Cumulative Layout Shift (CLS), and First Input Delay (FID) issues.
• What are their payment terms? This is a big one. What are your cash flow requirements? Most businesses pay net 90 days while others pay as low as net 30 days.
• How good is their service? Make sure they give you a good ad ops person to work on your site! This can make all the difference, as an experienced ad ops person will know where to place ad units, when to use video vs. interactive units, etc. They will also keep testing for improvements on your behalf and update your ad stack improvements like 3rd party cookie alternatives.
• Do their company values align with yours? Some focus on service, some focus on performance, and some do both.

Header Bidding Companies

There is a wide range of header bidding companies for website owners to choose from. When researching header bidding, companies examine the range of solutions they offer. Do they have the following?

• An approved Google MCM account
• Native video
• Interactive ad units
• Anti-Adblock
• Sticky ad units
• Smart ad refresh (this is not a time-based refresh)
• Compatibility with TCF 2.0
• Client-side and server-side header bidding
• Access to Google Open Bidding and Amazon TAM

What is Google Open Bidding?

In response to header bidding, Google developed its Open Bidding solution. Open Bidding lets you invite third-party demand partners to compete for your inventory in a single auction with real-time, server-to-server bidding. Open Bidding in Ad Manager also provides simplified trafficking, reporting, and billing.

How Does Google Open Bidding Work?

Google Ad Manager handles Open Bidding requests via a “server-to-server” (S2S) integration between publishers and their demand partners. Ad Manager runs a unified auction to determine the best yield after an ad request is generated. This allows third-party demand partners to compete in real-time for your inventory.

What is Amazon APS (Amazon Publisher Service)?

Amazon developed its own programmatic advertising solution (Amazon Publisher Service) to compete with Google. Amazon Publisher Services include the Transparent Ad Marketplace (TAM), the Unified Ad Marketplace (UAM), and Shopping Insight. Both TAM and UAM are cloud-based and rely on header bidding services.

How Does Amazon Header Bidding Work?

Publishers can enter Amazon’s header bidding program through the Transparent Ad Marketplace (TAM) or the Unified Ad Marketplace (UAM). TAM is a server-side bidding solution targeted at larger, well-established publishers that have individual relationships with SSPs. Amazon TAM users can see reports on all auction records for transparency, allowing them to review CPMs, winners, and bidders for each impression. In contrast, UAM services are geared towards mid-size publishers that need access to Amazon ads and SSPs that partner with Amazon. Users of UAM can also access a strong set of reporting tools. Amazon services include reporting on bid requests, impressions, and earnings.

Is Header Bidding Right For My Website?

Header bidding is the most effective solution publishers can use in 2022 to monetize their websites. If you have been using AdSense or AdSense alternatives to monetize your site, the chances are high that you will increase your revenue even further with header bidding. Snigel has over ten years of header bidding experience, and our team of experts is happy to answer any questions you might have. Get in touch to receive a free assessment.