Last November, we explained how header bidding works and what advertisers should know. Since header bidding adoption is on the rise, and advertisers and publishers are taking it to new levels of complexity and sophistication, we wanted to cover the latest developments. Jay Friedman, our president, recently contributed to this 2018 header bidding guide, and here are five header bidding trends to watch in this quick update you need to read:
1) Header Bidding Is Maturing on the Web.
With U.S. advertisers expected to spend more than four of every five digital display ad dollars this year via programmatic channels per eMarketer, web publishers are adopting header bidding to squeeze more money from programmatic advertising. In fact, according to ServerBid’s assessment of the top 1,000 websites that offer programmatic advertising within Alexa Internet’s Top 5,000 U.S. sites, more than half used header bidding as of May 2018:
Since advertisers and publishers have a greater comfort level with header bidding, they’re each trying to refine this programmatic buying technique to make it more efficient, transparent and profitable for them.
Advertisers, wanting to weed out low-quality sources, boost campaign performance and save money, are doing this by focusing on supply-path optimization (SPO), evaluating supply-side providers (SSPs) and exchanges to find the most direct paths to publishers’ inventory.
Similarly, publishers are focusing on demand-side optimization (DPO), evaluating auction data and identifying the most active, beneficial programmatic partners and the best buyer and seller combinations to gain the most revenue.
2) First-Price Auctions Are the Norm.
“Header bidding is still being adapted and adopted. But it is a fixture in the industry.” Jay Friedman, our president, recently told eMarketer. “Most auctions are going to first price now, and it’s up to advertisers to bid algorithmically to ensure they’re paying the fairest price.”
Why the change to a first-price auction model? Second-price auctions are difficult to execute for header bidding, especially when multiple demand sources are involved. First-price auctions make more sense: Publishers get the highest amount possible for their inventory, and advertisers get more price transparency to see what impressions are truly sold for. That way, they can change or optimize their buying strategies to compete.
But discovering the right buying strategy so advertisers don’t overpay for impressions in a first-price auction is a challenge. With inventory so vast and auction dynamics changing constantly, it’s nearly impossible to hit upon optimal bids manually. Advertisers need help, and that help comes from machines. That’s why, even though it’s expensive, many demand-side platforms (DSPs) are now reconfiguring to support first-price auctions and putting buying technology and tools in place to help advertisers bid to win.
3) Three Header Bidding Containers Are Standard.
Header bidding has a range of benefits, like giving many advertisers at once a first look at an impression before the ad server and getting publishers top dollar for their programmatic inventory. But one major downside is it can cause increased page latency and page load times, which can then negatively impact the user experience.
To combat this, publishers use containers, aka wrappers, which is simply technology to help them maximize, organize and manage their many header-bidding partners and all the code and complexity that come with them. These containers help publishers ensure all bids are made simultaneously and the ad server receives accurate, understandable info so the best bid wins every time.
Our president, Jay Friedman told eMarketer: “The market seems to have settled on approximately three containers.”
These three containers are client-side wrappers, server-to-server wrappers, and hybrid wrappers. A good number of publishers don’t just use one or the other; they use both. Let’s look at each type:
· Client-side wrappers: This type of wrapper is placed in the browser. Code is embedded on a publisher’s site and connects all buyers who want to bid on ad space. Client-side wrappers are transparent, and buyers are willing to bid higher for these opportunities because they get access to audience data (think cookies and meta info) they can use to best target their audience and maximize their ad campaigns. Still, page latency and slow page load times can still be a big issue if many demand sources are included.
· Server-to-server wrappers: This type of wrapper appears on an external server and includes all the info that once went in the browser. Working from an external server, there’s no drain on page latency, or page load, or negative effect on the user experience. But, one downside is they are less transparent than their client-side counterparts. Buyers typically bid lower for these opportunities since they don’t have access to audience data and can’t be sure a specific user is a good match for their campaign.
· Hybrid wrappers: This type of wrapper is popular because it’s a blend of both client-side and server-side wrappers. To increase the number of buyers without increasing the risk of page issues, publishers may choose to keep some buyers in a client-side wrapper and others in a server-to-server wrapper, depending on the buyers’ advertising goals. Those seeking cookies and visitor info to correctly target their audience may stay client-side, while those wanting to spread awareness or increase brand recall may go server-side. This lets publishers meet the needs of a great number of demand sources without losing money.
4) New Money-Making Practices Are in Play.
Though questionable, here are a few header bidding practices you should be aware of and understand:
· Bid caching: Publishers extend the life of bids. For instance, in this scenario, a buyer submits a bid but doesn’t win. The publisher then saves that bid for a small window of time, and if an impression comes up for sale in the header during that set time, the publisher submits the saved bid instead of rerunning an auction. This has ruffled the digital media industry because it’s not a transparent practice and sometimes is done without buyers’ knowledge. Won impressions from bid caching can hurt buyers’ ad campaign performance if they’re off-strategy or not brand safe.
· Soft floors: This is an artificial bid that the publisher can insert in a first-price auction so advertisers submitting the highest bid must pay the artificial bid price, or, in a second-price auction, must pay more than the actual second-price bid. Soft floors can be frustrating because buyers can’t determine inventory ad value and implement a successful bid strategy. They don’t know if the bid that won came from the competition or artificially from the publisher.
· Bid shading: Based on an ad tech provider’s calculation, buyers make a bid somewhere between the bids for a first- and second-price auction to not overpay for ad impressions. This practice is meant to get buyers more comfortable with the higher prices they now must pay due to the switch to a first-price auction model.
· Net vs. gross bids: Sometimes, SSPs and exchanges submit a gross bid to a publisher to beat out other competitors who bid net. However, this is a deceiving practice. The gross bid may win, but the buyer ultimately won’t pay that price. They will pay the net price, which makes publishers lose out on expected revenue. To not be fooled, publishers are making more of a point to carefully check header-bidding contracts’ payment terms so buyers are locked in to only submitting net bids.
5) In-App and Video Header Bidding Are Still in the Future.
Digital display and mobile web advertising are well on their way to adopting header bidding, but in-app and video advertising are behind and in the early stages with header bidding so difficult to implement there.
With in-app advertising, an app developer must add header bidder partners each time into an app’s software development kit (SDK), push out a new app version, and get users to accept and activate it, which is a multistep process that can be both time-consuming and challenging to accomplish.
As for video advertising, header bidding is done a little with out-stream video and native video but not for in-player video (pre-, mid-, and post-roll) yet. But there’s not much of a need to do it for in-player video anyway with inventory so scarce and publishers not struggling to sell it.
Header bidding, like other programmatic advertising trends, processes and practices, changes quickly. Think of all the latest developments that have occurred this past year. If you’re finding it hard to keep up, stay informed and chart the right course, we’re here to help – to expertly guide, advise and assist you with your programmatic campaigns.
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