Header bidding is an important component of programmatic advertising, which is focused on optimizing the process of trading advertising inventory, which increases its cost and transparency for all market participants. In this article, you will learn about what header bidding is, as well as its differences from RTB and waterfall.
What is Header Bidding?
Header bidding is a method of conducting an online auction in which several advertising platforms compete for the right to display advertising creatives on the publisher’s website. In Header Bidding, bid requests are sent simultaneously to all available advertisers, rather than one at a time, as in the traditional waterfall method. This increases competition between DSPs and ad networks and helps them get higher prices for ad slots.
How Does Header Bidding Work?
The Header Bidding process looks like this:
- The script is included in the header of the page. This is where the name of this technology comes from.
- Users visit the site, the script initiates a bid request simultaneously to all participating advertising networks and DSPs.
- Ad networks and DSPs bid for the right to display ads on this page.
- The script compares offers and selects the winner with the highest bid. For this purpose, the first or second price algorithm is used.
- The auction winner receives the right to place advertising material on the publisher’s page.
From the point of view of the average user, this looks like a normal page load. The entire process, from initializing a request to displaying an advertisement, takes no more than 100-500 ms.
Difference Between Server-Side And Client-Side HB
The header bidding process can take place both directly on the publisher’s website (client-side, CSHB) and on the side of a third-party server (server-side, SSHB). In the case of client-side HB, bid requests are sent directly to advertising networks or DSPs, and the page takes longer to load. In the second case, the bid request is first sent to a separate server, which forwards requests to advertising networks and DSPs. This reduces page loading latency but raises issues related to confidentiality of data use and transparency of auction results.
The second method is definitely simpler because all the work is done for the publisher by the SSP or advertising network to which it connects. The publisher is provided with a ready-made script, optimized for a specific site, and receives assistance with its installation. At the same time, you do not need to write code yourself and understand the technology.
Differences Between Header Bidding, RTB, And Waterfall
For a complete understanding, it is worth comparing header bidding technology with RTB and waterfall auction models.
How Does the Waterfall Auction Work?
A waterfall auction is a traditional method of selling advertising inventory in online advertising. Here’s how it usually works:
- When the page loads, the browser sends a bid request to the advertising network or SSP. This request contains information about advertising inventory, as well as other contextual data that can be useful in making a bid decision;
- The ad network or SSP sends a bid request to the DSP or top-tier partner. The top-level partner is determined based on transaction history, quality of advertising creatives, various technical parameters, and personal preferences of the publisher.
- If the first DSP does not buy the impression, the SSP sends a request to the next DSP. This is repeated until one of the partners buys the show.
- The DSP that was the first to buy the impression receives the right to place advertising on the publisher’s inventory. This works even if subsequent advertisers offer a higher price.
- Header bidding generates more revenue than the traditional waterfall method because it selects the highest bid among multiple advertisers rather than selling inventory to the first advertiser who agrees to buy the impression.
How Does the RTB Auction Work?
In RTB, advertising inventory is put up for auction in real-time, just like in the case of header bidding. Advertisers bid on ad impressions, and the SSP platform compares offers and selects a winner.
The first difference is that in RTB, the advertising code is installed in the body tag, and not in the head. If you use two technologies at the same time, the header bidding script will be called first, and after it the RTB code. This allows you to use information about the winning bid from the header bidding for subsequent participation in the RTB auction.
Header bidding is often carried out on the web publisher’s server side, before the main ad exchange auction. However, in practice, if the two technologies are used simultaneously, a conflict may arise, which will lead to longer page loading times and lower revenue. This requires careful setup and consultation from specialists.
The second difference is that you don’t have to partner with an external ad network to use header bidding. The script can independently send requests to advertisers and DSPs.
What to Choose: Header Bidding or RTB?
This question cannot be answered unequivocally, since both methods have their advantages and are suitable for different use cases. However, we will try to compare these approaches to monetization and give our recommendations on which option is suitable in your case.
Among the advantages of header bidding:
- Opportunities for increasing income. Header bidding allows you to receive higher payments for impressions. This is achieved because HB does not necessarily require a connection to an advertising network. The publisher can independently install the script and manage impressions, without the need to give part of the income to intermediaries.
- Transparency and control. Publishers have greater control over their inventory and can independently choose the partners with whom they will collaborate. This is possible if the HB auction takes place on the publisher’s server side.
Header bidding restrictions:
- Implementing header-bidding is more difficult than RTB.
- Browser pages may take longer to load if the auction is hosted on the website side.
Final Thoughts
Header bidding is best used by experienced publishers since the technology is more difficult to implement than RTB. RTB is suitable for both young publishers who have just begun to monetize their site and publishers with experience. If you own an advertising exchange or are just planning to launch one, we recommend that you implement support for header bidding. SmartHub, a reliable provider of white label solutions for launching an advertising exchange, can help you with this.
