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What is Header Bidding? Difference between water fall bidding vs header Bidding?
Header Bidding
Header Bidding gives benefits to the publishers so most of the publishers now adopt this technique. When compared with waterfall real time bidding method header bidding could be more transparent.
In our previous post we discussed Real Time Bidding and i just moved the bidding part just to be like – When user load website along with web content ad code also gets loaded. It reaches Ad Server [SSP] and SSP send this ad request to more DSP and collects bid information. Once collected the highest bidder won this auction and their ad displays on web page. That’s it right.
How Ad Server sends bid requests to other DSP’s? To all DSP’s at the same time or one by one?
There are two techniques followed by ad tech,
>> Waterfall Bidding Method
>> Header Bidding Method
What is Waterfall Real Time Bidding Method?
Before getting into the topic “Header Bidding” you must know about the method existing Waterfall Bidding Method. So that you can understand the process of Header Bidding better and also why is it needed.
One Ad Server can connected with N number of DSP’s [Ad Networks]. When Ad Server received a bid request from the website, it just did not forward the request to all DSP’s [Ad Networks] connected with it. Instead it follows a certain method for sending bid request called the Waterfall method.
SSP categorize the Ad Networks and group them into several categories. Each group of categories has different priorities. For example, Ad Networks categorize by below,
>> Publisher Direct Deals [ 1st Priority]
>> Premium Ad Networks [ 2nd Priority]
>> Vertical Ad Networks [3rd Priority]
>> Small Ad Networks [ Low Priority]
>> Other Ad Networks etc etc
How Waterfall Bidding Method Works?
This screenshot refer header bidding, but you can follow this screenshot for understanding the waterfall process.
The main motive of the Ad Server is to sale the incoming bid request at a high price.
Step 1 : When a user visits a website bid request generated and sent to the Ad Server.
Step 2 : Based on the previous average performance and average CPM’s ad server just set price. For Example, $1.90
Step 3 : Ad Server first sends the bid request to Publisher Direct Deals which is in 1st priority
Step 4 : Any advertiser bid above the floor price $1.90, for example $2 then this advertiser won this auction and their ad showing on webpage
Step 5 : If any Advertiser listed under Publisher Direct Deals [ 1st Priority] then this network sends passback information to the Ad Server. Ad Server again forward the ad request to next priority ad networks Premium Ad Networks [ 2nd Priority]
Step 6 : When moving to the next Ad Networks SSP may decrease the floor price to sell the Ad Slot.
Step 7 : If no one won this auction then Ad Server repeats the same process till it sells the ad slot.
Advantages of Waterfall Bidding Method
>> Increase Revenue
The main advantage of the Waterfall bidding method is Fill Rate. The below example gives you better clarity,
Let’s consider, 1000 Ad Request are made.
Premium campaign fills 20% of Ad Request at the price $5 = So revenue is $1000
Remnant or Small Campaigns fills 100% of Ad Request at the price $1 = So revenue is $1000
But how waterfall bidding method increases revenue for the publishers?
Premium Campaign fills 20% Ad Request at the first round. In the waterfall method the remaining 80% of Ad Request is sent to low priority campaigns and filled by Remnant Campaigns.
Premium Campaigns Revenue = $1000 [20% * 5]
Remnant Campaigns Revenue = $800 [80% * 1]
So the total revenue increased by $800 in the waterfall method.
>> Easy to implement
Compare to Header Bidding method implementation is very easier to implementation
Disadvantage of Waterfall Bidding Method
>> Revenue Decrease
I mentioned Advantage as “Increase Revenue” and now disadvantage as “revenue decrease”. Don’t Smile and Don’t get confused. We can’t exactly predict the bid price and fill rates exactly so we must analyze both scenarios.
Let’s take the same scenario, Ad Server Sets floor price as $1.90 for one bid request. As per the waterfall method it first send the bid request to Direct Deals Ad Networks. If any campaigns bid higher than $1.90 [for example $2] then they will win this auction and their ad showing on webpage.
Note carefully, In this method the publisher/ad server doesn’t know what other campaigns listed in the low priority campaign are ready to bid. Even if they are interested in bidding for $5 they can’t win this auction since this process already ended when Direct Deal campaign won this action by $2. In this scenario, publishers might face loss.
>> Secret Method
In the waterfall method, publishers only know the final winning bid amount.
>> Bid Loss
Due to the reason of back and forth passbacks bid requests are lost sometimes. So we can’t expect 100% impression fill rate for passback bid requests.
What is a Header Bidding? How does it work?
To solve the above two disadvantages of the waterfall bidding method gives an opening for header Bidding. Header Bidding is also called Pre-Bidding or Advance Bidding. In this method, bid requests are sent to the SSP [ad server] and ad server forward this ad request to all the DSP’s at the same time. There is no priority at the ad networks.
All the bid responses from various campaigns received by an ad server and auction happening here. Whoever bid the most will win this auction and their ad show on the page.
How Header Bidding Works?
To adopt header bidding websites need to implement some script or container. When a user loads this website this script gets executed and it will generate ad requests. This ad request forwarded to multiple DSP’s like appnexus, rubicon etc. Bid information from all over the DSP’s received to the browser.
Depends upon the design final auction done any one place, Browser itself or Separate Ad Server specifically designed for Header Bidding Auction. Certain time duration allotted for receiving bids so auction happens between the prices which are all received within that time. Who bids the highest amount will win this auction.
If an auction happens in the browser itself, it will increase the browser loading time and some inefficiency. So a separate ad server will be better.
Advantages of Header Bidding
>> For advertisers,
In waterfall method, low priority campaigns can’t win the premium inventory slots since they might be won by high priority ad networks. But header bidding will give equal priority and lower campaigns can also win premium slots by bidding high.
>> For Publishers
This method will give detailed information to the publishers, who are all bid, which is winning bid etc. In this method publishers can win the highest price amount for every single impression.
>> Fill Rate High
There is no back and forth pass backs here. So loss of bid request to very minimal in this method
Disadvantage of Header Bidding
>> Page Loading Time
In header bidding, publishers need to run additional script on their page. So it should increase page loading time. If the publisher connected with more ad networks then it should wait for response and take time to process it.
Previously, auctions processed by browsers. Sort of code and container executed it. In this method it will take additional loading time. Now, Server Side auction method supported for header bidding. So bids received by the ad server and auction happens there. Winning ad send to the browser. In this method browser save its power.
>> Not Easy
You can’t adopt and implement header bidding in your site. There are lots of process you must learn before get in to this.
>> Keep monitoring
Once started publishers should monitor the performance and make the changes accordingly. Also adding/removing buyers also an important task in header bidding.
Do you understand about Header Bidding”? Please Comment!
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