The future of header bidding lies in transparency

The programmatic market in Japan is expanding rapidly, and is expected to be worth over $2.5 billion by 2020, up from around $1 billion today.

One of the technologies driving this impressive growth is header bidding, a vital tool for programmatic success which is gaining traction among Japanese publishers. Header bidding allows publishers to realise the true value of each impression and boost revenues, with a recent case study showing publishers using Exchange Bidding—Google's answer to header bidding – have seen an average yield increase of 48% in the past 12 months.

So how is header bidding evolving as a catalyst for programmatic growth and what does the future hold for this highly beneficial technology?

From concept to container

The original premise behind header bidding is simple. A piece of JavaScript placed in the header code executes an auction with multiple demand sources simultaneously, before any final decisioning by the ad server. For publishers this increases fill rates, yield and competition, enables dynamic pricing and eliminates passbacks, while for advertisers it means access to more inventory at a potentially higher priority.   

But the effectiveness of header bidding in boosting revenues inevitably led publishers to increase the number and variety of demand sources included in the header, in hopes of achieving the maximum benefit. This resulted in page latency issues negatively impacting viewability and the user experience, and in turn initiated the creation of header bidder containers to help manage multiple demand partners and streamline monetisation partners. However, these container solutions have flooded the market while at the same time falling short of publisher expectations.   

The catch with containers

The first issue with containers is bidder management, which is largely done by the technology owner. The publisher often has little awareness or understanding of the technology behind the solution. The second difficulty is transparency as containers are frequently run as closed, black-box environments, meaning the publisher has no insight into the auction dynamics or how other configuration changes can impact bidder performance. Finally, the third challenge is that containers have evolved rapidly with no technology standards, relying on different implementations for each publisher and demand partner, making performance measurement and comparison difficult and at times impossible.

These drawbacks mean publishers have lost control of their monetisation strategies. To optimise header bidding, ad tech partners and publishers need to work together to tweak settings within the ad server and on page in order to extract incremental yield. This level of fine-tuning and optimization is made difficult within closed container environments due to the lack of industry standards and proliferation of third party solutions.

Transparency holds the key

Fortunately, not all container solutions are following the same path. Over the past year open source, collaborative solutions such as Prebid have emerged to enable fair, transparent, and efficient header bidding across the industry, with no black-box auction dynamics or inherent preference for one company over another.

This development should inspire publishers to rethink their use of sub-par header bidder containers and move instead towards trusted and transparent technology providers who can help them regain control of inventory monetisation. Tech partners should simplify container management and provide the tools publishers need to test and adapt floor prices and traffic settings, gaining operational efficiencies and achieving the best possible outcomes. They should deliver transparent data and analytics, so publishers can quantify the success of each header bidding partner. Publishers should take their time in selecting tech partners, based on integrity, a commitment to serving the publisher’s needs first, and the metric of clear and measurable added value.

Programmatic has come a long way in a short time, with each solution to overcome technical difficulties resulting in new challenges. Header bidding is a huge step forward, allowing publishers to boost programmatic yields, but for it to have a successful future the industry needs to move away from overly complex, non-transparent, containers and towards more open, trust-based tech partnerships that put publishers in full control of monetisation.

Keisuke Meguro is publisher development director at OpenX Japan.