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Not All In-App Header Bidding is Equal

Published on March 28, 2018  •  Martech Advisor

Over the past decade, mobile in-app publishers have depended on ad networks and mediation platforms to drive their businesses. It’s summarized broadly as a world wherein publishers used platforms to deliver ad impressions to (at best) hundreds of advertisers, and a handful of buying channels/network SDKs, to deliver off-the-shelf display ad units to users irrespective of the app’s interface. This was done to maximize revenue through a waterfall of historical pricing, tweaking rate cards, packaging, and targeting. The process was typically run by large teams at publishers who managed ad networks that would jockey for position in the waterfall in a winner takes all scenario where the top position gets first look and the best inventory. While functional, this created a scenario where most publishers were unable to access a very large cross-section of advertisers, nor did they have sufficient transparency and control over their business, or efficient algorithms to control their own revenue, instead depending on ad networks to optimize their individual contribution to revenue, creating imperfect alignment of incentives.

In 2018 and beyond, publishers’ focus is moving from running a make-do functional setup to implementing systems that allow them to drive, control and maximize their revenues. New generation mediation platforms, driven by header bidding and artificial intelligence algorithms for maximizing yield, are set up to deliver transparent, high-performance ad impressions to tens of thousands of advertisers through programmatic buyers and ad network SDKs alike. Publishers today strive to deliver a clean, custom ad experience to their users to maximize user retention and increase revenue, while utilizing the full advertiser transparency and auction mechanics visibility afforded by the header bidding platforms.

The Transition to Header Bidding

The reason publishers need to move to header bidding continually comes down to three words: Yield, Trust and Efficiency, which encompasses:

  • Yield:
    • Advertiser Participation at Scale. The industry’s top mobile publishers displayed programmatic ads from more than 50,000 advertisers across brands and performance buyers in 2017. By driving platform models to a fully programmatic mode, every publisher will be able to jetpack away from running 50 advertisers to 50,000 advertisers.
    • Next Generation auction models. It's not five SDK partners and three programmatic buyers anymore. Running old-school waterfall auctions for network SDKs is bound to be sub-optimal. The only way is to have an open auction, a simultaneous auction allowing every buyer to bid the highest possible price for each impression. This leads to a fair and unbiased marketplace unlike any current day effort, the benefits of which extend across both advertisers and publishers. The unified auction gives all buyers access to the inventory, allowing the publisher to capture the maximum amount of bids for each impression. As the waterfall model is eliminated, and buyers have greater insight into inventory, competition increases and publishers capture increased CPMs.
  • Trust:
    • Transparency which is simply not available to publishers today. Programmatic buyers have an incredible amount of information, data and publisher/app-level info available to them real-time, while publishers selling to these buyers have no clear understanding of what constitutes their own business, beyond the channel partners.
    • Open measurement of industry hygiene metrics. Publishers need to be able to deliver viewability, fraud and performance metrics transparently across all buyer partners (irrespective of how they're integrated -- SDK, server side, or RTB).
  • Efficiency:
    • Driving Retention and uprooting old-school ad formats. Move to new-age, native, programmatically tradable, high-value ad formats. This is a macro movement towards a better user experience that is closely tied in with header bidding as it allows publishers to have fewer, but significantly higher, value impressions.
    • Publishers will no longer need large teams. These teams would manually run a revenue maximization process with each ad network and demand-side programmatic partner, and use header bidding to deliver their revenue goals.

What’s Next?

This is a transitory phase and ad technology companies have the responsibility to usher this change with publishers globally by partnering closely with them - understanding their users and their app environments, and to build products for the next generation of mobile in-app publishers. In that context, positive reinforcement of publishers' moves towards header bidding is absolutely necessary, even if sub-optimal legacy solutions from desktop players are serving this need currently. Calling out those efforts as "fake news" is inaccurate messaging to the market. In fact, many players in the market are actively building products to serve publishers in this new world, and these strides all help to drive the industry in a better direction.

While publishers move in the direction of achieving optimal solutions, many are taking intermediate steps to achieve incrementally better yield, efficiency and buyer trust. The onus is on publisher platforms to usher the next generation of technologies to maximize user retention and increase revenue.