Weighing the Pros and Cons of Header Bidding

By Samantha Podwoski in Media Strategy on August 31st, 2016

Pros and Cons of Header Bidding

Header bidding has been the buzz in the advertising world for the past year, with 70 percent of the top 1,000 publishers adopting the service. So, what is it—and what’s the big deal? Consider it a bidding war. The publisher is in control and can set the bar high for buying platforms to duke it out for their inventory.

What is Header Bidding?

Header bidding occurs when a publisher embeds JavaScript code into their site header, allowing first-look access to their preferred partners ahead of an ad exchange. AppNexus, OpenX and Yieldbot are three of the top direct header bidding partners with which an advertiser can partner, although other buying platforms can execute header bidding as well. A publisher can select only a limited number of partners to share access to their header bidding, as adding too many partners would cause latency in page load.

Header bidding can be thought of as first-access to publisher inventory. If an ad call doesn’t take place in header bidding, the bid will fall to an exchange. From here, there’s a waterfall effect wherein both the quality of the inventory and the cost per bid go down if a bid doesn’t take place in an exchange.

Who is coming out on top in this scenario? Here’s the run-down of pros and cons of header bidding:

Pros of Header Bidding:

  • For publishers. Publishers are seeing a 50 percent increase in CPM, and therefore increased revenue.
  • For advertisers. Advertisers will have access to premium inventory and first choice before an ad exchange. They’ll also receive higher viewability, as opposed to being sold remnant inventory on an exchange that may not be viewable. Viewability goes hand in hand with premium inventory, as header bidding partners are able to see all available inventory on a publisher’s website and therefore can place bids on the premium home page and above-the-fold placements.

Cons of Header Bidding:

  • For publishers. Each publisher will have a different experience with header bidding depending on the complexity of their website. They will need to hire AdOps professionals who can input and regularly update the JavaScript code. Due to the necessary manual work, there is a possibility for the waterfall effect to still take place if coding isn’t updated.
  • For advertisers. Advertisers are going to be paying a pretty penny. This may not affect advertisers with large budgets as much, but smaller brands may find themselves losing the bidding war. Advertisers will no longer have the advantage of buying guaranteed deals with publishers either, since header bidding companies have access to all publisher inventory.

Should You Implement Header Bidding?

You could say header bidding is a win-win, because publishers are receiving increased revenue and advertisers are getting in front of premium inventory that’s actually viewable. Many case studies also show that brands using header bidding are seeing significant increases in their ROI. So, it’s essential that advertisers know if they are already using header bidding in their display campaign, and if the additional cost is benefitting their ROI. According to Yieldbot, an advertiser may know if they are already using header bidding if their CPMs are high, but it’s worth asking your buying partners to be sure.

Gone are the days of guarantees and programmatic bidding through an ad exchange to decipher where your ads will run. We will watch as header bidding companies and Google duke it out, raising pricing for premium inventory.

Our experts would love to help you master header bidding to increase your ROI.

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