If you have a screw, don’t use a hammer: an insider’s look at how to get header bidding right
With the industry currently moving towards header bidding as its go-to programmatic tool, it’s a good moment to stop and take stock. Header bidding is just one of the programmatic trading methods digital content providers can reach for to get the job done. Which trading method is the best tool for the job and how do you select it? Bottom line: understand the task at hand to choose the right tool for the job.
Traditional header bidding: it’s a work-around solution
The best way to understand header bidding, and its challenges, is to understand that header bidding is essentially a hack – a way for content providers to circumvent the ad server waterfall. It’s an attempt to increase competition in the auction, and ultimately, revenue. But like many hacks, it might not be the most sustainable solution.
This is how it works: in its most basic form, a webpage consists of a header, a body, and a footer. Normally, the ads you see on a page are served from ad server tags that appear in the body of the page. With header bidding, sell-side-platform tags are placed in the header of the page, either directly or via a wrapper/container. That allows a content provider to run an ad auction ahead of their ad server.
However, the header code on a website was actually never created to run something as complex as an ad auction. That requires content providers to invest heavily in ad ops. First by inputting hundreds to thousands of line items in their ad server. Then by requiring constant maintenance by engineers so a site doesn’t malfunction. Add managing latency to the list and anyone can see it’s not just a switch you can flip.
The result is an increase in competition compared to using the waterfall method only. That’s because there’s now an actual second-price auction taking place before the ad server decision. However, since header bidding auctions are run as separate auctions across multiple SSPs, the auction principles that would invariably lead to a maximum revenue take for content providers aren’t allowed to play out. Ultimately, content providers aren’t achieving maximum return for their inventory; they are simply attaining a short-term bump in revenue.
While header bidding offers a very short-term revenue bump, it forces the header of a website to carry out execution, potentially causing a content provider’s site to malfunction. Maintenance is constant. But because auctions are run as separate auctions across multiple SSPs, the auction principles that would invariably lead to a maximum revenue take for content providers aren’t allowed to play out. Is the investment worth the return?
Server-side header bidding: eliminate the hassle, scale up on revenue per impression
The heavy set-up, maintenance, chances of latency and site malfunction – a server-side option solves all of these problems. In addition, unlike traditional header bidding, content providers are not limited to the number of demand partners in the auction because of latency issues. This allows for as much competition as possible within a header bidding solution, ultimately increasing revenue.
A server-side solution works by placing just one tag in the header of a content provider’s website, moving ad auction execution away from a user’s browser and back onto a server. That results in an easier technical set-up in the ad server and easier maintenance of a content provider’s site. With this option, engineers don’t have to constantly be managing code to guard against malfunction.
Most importantly, a server-side solution is a tool specifically designed for the task of creating a more profitable programmatic auction. It solves the problem of the siloed auction, placing all demand sources in one bucket, pitting them against each other, and allowing a tech provider to apply a second-price auction across all bids. Remove the silo and you get more competition and more revenue. The result is an auction that’s closer to holistic programmatic; it’s what’s referred to as a semi-holistic auction. This is a great option for content providers who want to dip their toe into the benefits of a semi-holistic auction, but still retain their current ad server.
The heavy ad ops set-up, constant maintenance, the need to guard against latency and site malfunction – a server-side option solves all of these challenges. It also solves the problem of the siloed auction, placing all demand sources in one place and pitting them against each other. That allows for as much competition as possible within a header bidding solution, ultimately increasing revenue.
Beyond server-side: a purpose-built tool for the task of maximising ad auction revenue
Ultimately, the tool most capable of delivering maximum competition and revenue is the trading model built solely for the purpose of optimising the ad auction. Because it’s a solution that combines smart SSP auction technology with ad server technology, it’s something referred to as full-stack holistic. Vastly more effective than traditional header bidding, this option also has a few aces up its sleeve compared to a server-side solution.
In other trading methods, reliance on static ad server technology means that some of a content provider’s most valuable campaigns and impressions aren’t allowed to take part in the auction. The full-stack holistic method works by creating a unified auction in which even direct campaigns, guaranteed campaigns and first frequencies are leveraged in real time to achieve maximum revenue at any given moment.
So while a server-side solution is the best way of approaching header bidding, it can’t take into account a content provider’s high-priced direct campaigns. A full-stack holistic solution creates a unified auction, allowing direct campaigns to compete with all other campaigns, and giving the entire auction an extra boost in revenue.
In any non-full-stack solution, the ad server makes the final call in the auction. As a result, an ad server can award the auction to a lower paying direct campaign it’s been set to prioritise. Ad server technology just isn’t flexible enough to calculate the highest return per auction at any given moment. A full-stack holistic solution is smart, flexible technology that can project ahead. That means it can protect guaranteed campaigns, while at the same time, allowing higher bids from other campaigns to win an auction.
What’s more, a full-stack holistic solution allows content providers to receive an honest revenue return on their first frequencies. These are their most valuable impressions. But when direct campaigns are run through an ad server, these impressions are often delivered at some of the lowest prices. Now first frequencies can go to the highest bidder, and guaranteed campaigns are never at risk. This results in the highest revenue per auction, per impression, at any given moment.
A full-stack holistic solution is smart, flexible technology built specifically to maximise revenue in the programmatic auction. It creates an auction that takes advantage of the value of high-priced direct campaigns, first frequencies, and real-time auction dynamics, all while protecting guaranteed campaigns. It’s technology created to sustainably safeguard the revenue interests of content providers.
Define the task, select the tool
With header bidding emerging as a go-to programmatic trading method, it’s important for content providers to remember that not all methods and programmatic technologies were created equally. Relying on the wrong tech, like a website header or a static ad server, to run a programmatic auction isn’t going to provide the best solution. As a final caveat, a crucial factor in any sustainable solution is that of transparency. Content providers should make sure they are working with an ad tech provider that solely has their interests at heart. Ultimately, it’s up to content providers to weigh their business needs and choose the right solution to match them. But it’s up to those in ad tech to arm content providers with the knowledge they need to choose the best tool for the job – the programmatic trading method that’s going to work best for their business.