Will header bidding shake up the programmatic power balance?

Header bidding is a technique whereby publishers offer inventory to multiple ad exchanges simultaneously before making calls to their ad servers. 

This method has been viewed as primarily benefiting publishers as it helps increase their ad revenue while gaining them greater control over their inventory. Prior to header bidding, publishers would have to extend advertisers the 'courtesy' of not paying for non-viewable impressions, rather than all impressions served. 

This is where the benefit for buy-side lies. Buyers are now afforded greater clarity around the inventory they have purchased via header bidding, as now ads are delivered just before a page loads.

Speaking to Campaign Asia-Pacific, Naru Radhakrishnan, Millward Brown's chief client officer for Southeast Asia, called header bidding a “natural evolution” that benefits publishers, as it is known to improve yield. Millward Brown recently highlighted header bidding in its Digital & Media Predictions 2016 report.

Naru Radhakrishnan

“The biggest challenge to adoption is its impact on user experience, such as latency, and more importantly, benefits for advertisers,” he added.

Unlike programmatic, which was clearly a win-win for publisher and marketer alike, what marketers stand to gain from header bidding is unclear. And with programmatic still nascent in large parts of Asia, the research consultancy currently sees it as early days in most markets.

Radhakrishnan noted that it will be interesting to see how this plays out in Asia, which is largely driven by video and social. Adding that even on the programmatic platform, advertisers are pushing for including soft measures to profile the audience.

“However, the few that are heavily into programmatic still offer an opportunity for publishers to hop onto the header bidding bandwagon,” he added. “We think initial converts are likely to be smaller-sized publishers who feel that their inventory is not valued fairly in the ‘waterfall system’,” he said.

In addition, the research consultancy has predicted a DSP-led acquisition spree, and Radhakrishnan believes that this benefits long-tail publishers who sell the majority of their inventory via ad exchanges, as large publishers are still largely reliant on their sales teams and benefit from the current ‘waterfall' system.

Business benefits

Grégory Pichot, senior account director at AppNexus Singapore, described header bidding as an “inherent response to Google’s opaque and closed system.”

“In a world where Google allowed publishers to access multiple demand sources directly and without bias, header bidding wouldn’t be relevant,” he told Campaign Asia-Pacific. “In this sense, header bidding is an instrument intended to create transparency and openness.”

The company is pushing forward offerings in the space and earlier this month announced the launch of PriceCheck, a new solution that extends header bidding from desktop to mobile apps.

The ad-tech provider is bullish on the solution’s adoption in what it called the “world’s most mobile-centric market”. Its own research efforts indicate that 90 percent of programmatic adopters use programmatic for mobile in APAC, compared to 71 percent globally.

Pichot added that all publishers, regardless of region, should consider header bidding for both desktop and mobile if they aren’t using it already. The process offers an alternative to traditionally inefficient waterfall setups, providing publishers direct access to all demand sources equally.

Grégory Pichot

“Header bidding improves the entire ecosystem, including marketers and advertisers,” Pichot said. “It separates the valuation process from the ad-serving process, giving all demand sources equal access to each impression. This opens up pipelines between publishers and demand sources, eliminating costly daisy chains and creating a more efficient flow of both impressions and dollars between buyers and sellers.”

Pichot said that header bidding is still a relatively new option—in all markets—but the company has begun to see more and more publishers adopting the solution given its tangible incremental revenue results.  

“Header bidding allows publishers to achieve maximum monetisation for their inventory by running auctions directly on their pages or in their apps,” he said. “We’ve seen it transform publishers’ businesses, creating major operational efficiencies as well as increased revenue.”

Obstacles ahead

Radhakrishnan pointed out that the biggest challenge is managing the complicated technical setup that comes with adopting header bidding.

The Millward Brown report noted that header bidding will force change in how advertisers, agencies and publishers transact. Implementation is cumbersome, and there’s a risk of lower viewability if there are too many ad tags in the header. Ad tags will need to be limited to avoid latency in page load time, as users will abandon a page if it’s too slow.

Pichot agreed, adding that if improperly implemented, header bidding can increase latency and cause conflicts between multiple demand partners, leading to a poor user experience.

“But publishers can leverage javascript code that prevents these issues, such as the open-source library available on prebid.org,” he added. “This header bidding code is asynchronous, has consistent timeouts and manages conflicts.”