What is Header Bidding

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With internet, advertising gained second breath, which helped people to gain more money and to promote their products or brands more efficient. One of the best inventions in sphere of advertising is programmatic advertising. This type of advertising is fully automated and helped people sell or buy advertisement in larger numbers. However, humanity had always wants to reach new heights. Same thing happened to programmatic advertising – header bidding was invented.

Despite the fact that the technology appeared several years ago, people working in the field of programmatic advertising may still wonder: what is Header Bidding and how does it work? Header bidding is based on a sales model that allows several companies to buy advertising inventory at an auction at the same time, which gives undeniable advantages for both buyers and sellers of advertising spaces.

How does Header Bidding work and why is it better than “Waterfall”

Header bidding can be defined as a technology that allows webmasters to make their inventory available to multiple DSPs (demand-side platform) or ad networks at one time.

To understand the value and importance of technology better, we must focus on the traditional auction model for selling inventory using “waterfalls”.

According to the model with “waterfalls”, applications for the purchase of inventory in the programmer come sequentially. For example, an ad slot was not sold directly, the ad-server sets a specified minimum price (floor) for it, and then trades with only one buyer. If the first buyer offers a higher price than the established minimum, then he is guaranteed the redemption of the advertising space; however, if the price is lower, the request proceeds to the next platform until the ad slot is sold. Whenever a request is not converted to a sale, it must go through a “passback”: this is the request returned to the webmaster’s ad server. As a result, the entire system slows down, because the bidding process must begin anew for each buyer.

Undoubtedly, the model with “waterfalls” has several drawbacks. Firstly, not all DSPs are granted access to inventory, since the ad slot will be sold to the first buyer to offer a higher price than the minimum price. Secondly, webmasters will get first amount of money that exceeds the minimum price, which excludes more profitable options.

Now that we’ve remembered how the traditional auction sales model works, let’s get back to Header Bidding. Thanks to this technology, purchase requests are made in parallel, which means that all DSPs compete simultaneously. In other words, the webmaster offers his inventory to several bidders who can bid at the same time through the JavaScript code set in the site header (hence the name Header Bidding). At the end of the auction, the webmaster will choose the best offer among all the DSPs.

Advantages for advertisers

  • It grants a better viewability on inventory that is available.
  • Whole process became even more transparent.
  • Allows to appeal to the global market.

Advantages for publishers

  • There is no need for constant ad adjustments.
  • Reduced latency.
  • The competition increased up to 100%.
  • The inventory has maximum usage.
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