Discover All About the Pros and Cons of Header Bidding in 2022

As more platforms opt for header bidding solutions, the good thing is that many programmatic buyers and publishers are still learning how header bidding works.

While Header Bidding was developed for all advertisers to bid at once with the top bidder winning the ad inventory, it still confuses the heck out of many people.

It is mainly due to these extensive jargon lists and acronyms in the process. This specially designed post is for you to learn about the pros and cons of header bidding.

Header Bidding

As header bidding is an advanced bidding method, it allows the publisher’s ad space to be offered to countless demand partners at once. 

Basic definitions of header bidding are never enough to learn about what it can offer. To better understand before going to the pros and cons, let us look at how does header bidding work?

The Waterfall Process

Suppose the publisher has various demand partners and one unused ad placement. The algorithm will rank them according to their average historical performance in this process. Other than that, both parties in the ad network will agree on the floor price which is the lowest price of available ad space. When users open the application or page, the server will call the first partner in the ladder. 

If the bid is not efficient enough, the server will send the request to another partner in the waterfall. The process will repeat itself till someone reaches the floor. This method guarantees high fill rates—the amount of sold ad placement against the offered. 

The Drawbacks Of Waterfall

To understand the drawbacks of waterfall, consider this example: the price floor is 2 dollars. The first ad network will bid for 1 dollar, the second one is 2 dollars, and the third is 3 dollars. Since these partners will be called one by one, the impression is sold to the 2nd ad network. In other words, the impression is sold to the first network which meets the floor. Even their bid was not the highest.

How Does Header Bidding Work?

Header bidding acts like a real auction. Demand partners will bid constantly, and the highest bid will win. 

A code snippet with several adapters will be inserted in the page header. Each adapter allows the sending of bid requests to the specific demand partner. To avoid increased latency, the publisher will set the timeout. It will be the timeframe in which the demand partners will get the chance to bid. When users open the page, the ad server will call out the demand partners, they bid, and the highest bid will become the winner. It all happens within the speculated time frame.

Pros Of Header Bidding

Higher profits for the app owners and increased inventory options for the media buyers are the two significant reasons publishers are opting for header bidding in their advertising plans. For example, the telegraph managed to enhance their programmatic advertising revenue by about 70 percent due to header bidding. While this information may be sufficient for investing in header bidding, let us peek at the benefits of header bidding.

  • More Bidders With Server-Side

While the client-side of header bidding is limited to only 5-7 sources for ads, the server-side variety will allow publishers up to 20 auction participants.  This leads to better targeting, smarter impressions allocation, and increased yield.

  • Reduced Latency

Header bidding allows the ad server to request the bids in parallel. It will oppose the waterfall method in which the process is complete until one ad slot is filled. 

  • Revenue Latency Balance

The best thing about header bidding is that it assists publishers with more room for customization. This includes configuring timeouts and adding and subtracting demand partners for better latency when it comes to ad revenue.

  • Fewer Discrepancies

Fewer steps will lead to fewer discrepancies between the advertisers’ and the publisher’s reports.

  • Flexibility

Compared to the waterfall method, header bidding has become way more popular than its predecessor. Both methods will usually integrate well with one another on the ad server. 

The mechanics also work great. For example, header bidding does the auction on the ad network, which gets the winning bid and converts it into the keyword price, and it will go to the ad server. There will be special header bidding line items on the ad server with specific price density points. The winning bid will work as the normal source for the ad competing with other sources in that waterfall.

Cons Of Header Bidding

Header Bidding may have garnered a lot of attention because of the multiple perks it offers. However, it does come with a few cons like:

  • Slower Loading Speed

Since header bidding lets us work with multiple demand partners simultaneously, it can potentially decrease the loading speed of the webpage and have a negative effect on the UX. However, you can solve this problem with the help of server-side bidding.

  • Less Transparency

This issue may arise when using a third party for the ad network prebid server. It also acts as a source of demand at the same time. It may artificially prioritize specific bids, and you will never know the reason behind their winning.

  • Technical Experience Needed

Many publishers are reluctant to go for header bidding. The reason for this is that it needs experience. Opting and configuring the header bidding wrapper, managing ad units, making changes to the demand partner lists, and other tasks associated with header bidding needs technical knowledge. Hiring a programmatic ad network works in such cases.

  • Duplicate Bidding

Marketers usually use various DSPs to maximize the reach, while publishers may have dozens of SSPs. This results in duplicate bids competing against one another.

Conclusion 

This was the good and the bad of header bidding. Always go for the right ad network to never be at a loss. Make sure you do enough research work before you go and make any choices regarding header bidding on your own

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