Header bidding as an ad technology has evolved from being a less understood concept to a mainstay over the past few years. The shift from a legacy, waterfall-based mediation logic to a simultaneous mediation logic (as seen in the header bidding world) has proven to be an effective monetization strategy for app publishers. Besides driving more programmatic revenue to their apps, header bidding is also operationally more efficient.
However, most header bidding conversations in the market have publisher benefits at its core. This has often led demand partners to believe that header bidding is a zero-sum game, which is far from the truth. Header bidding as a technology has both sell-side and buy-side advantages over app inventory that’s mediated through a traditional waterfall model.
1. Access to Significantly Larger Audience
Header bidding addresses a crucial challenge many advertisers face: access to quality inventory and users, at scale.
Let’s look at a traditional waterfall model where the inventory is passed on from one ad exchange to another in order of historic pricing (eCPMs). Each hop down the waterfall takes away the more premium inventory from the available pool of supply. In this scenario, advertisers connected to an exchange that is placed lower in the waterfall model, in all likelihood, will not have access to the same volume of inventory or scale of users that they would like to see or be willing to pay more for.
In a header bidding world, all exchanges are given an opportunity to respond back with a bid for every single ad request. As a result, platform partners like demand-side platforms (DSPs) can access not just a portion of a publisher’s inventory but all of a publisher’s inventory and users consuming it. Advertisers, consequently, are better positioned to reach more users across the pool of inventory they choose to access.
2. Every Bid Matters (Disintermediation)
Given that waterfall models call demand partners hierarchically, advertisers are treated unequally for each new ad request by default. A marketer willing to pay a highly competitive real-time bid for a specific user or impression will only be able to reach the user if the historical average eCPM of an ad network/exchange that they work with is relatively higher than the other networks or exchanges. Such a system is inefficient because every user or impression opportunity is only valued basis a previous denomination.
This not only creates invisible competition in the form of historical eCPMs but also drives a negative feedback loop wherein advertisers may mistakenly believe inventory to be significantly more expensive than its actual value.
Header bidding allows all partners, irrespective of their historic participation, to have an equal access to premium high performing inventory. All auctions are unified and cleared using real-time bid responses from advertisers. This creates a true, fair mechanism for advertisers to reach the users and impressions they value the most.
3. Increased Transparency of Supply for Better Planning
Marketers strive to estimate, forecast and scale their reach of unique users — and they work with their DSP and exchange partners to achieve a clear understanding of this reach. However, in traditional waterfall models, this modelling is not only inaccurate but also highly variable, making it difficult to forecast into the future.
As a result of the equal opportunity and access to premium high performing inventory it provides, in-app header bidding empowers advertisers to have much more visibility over the supply that works best for them. Keeping the desired outcomes of a campaign in mind, buyers can make informed decisions about the campaign budgets and bid optimally to ensure maximum results.