digital-business

Op-ed: Lessons from Header Bidding’s growth for 2017

Header bidding exploded in 2016: What did we learn and what should publishers be paying attention to?

It wasn’t some fluke in the night. Header bidding took off across the globe in 2016 – and for good reason. The solution provides publishers with an effective alternative to the closed and opaque auction ecosystem of Google’s DoubleClick for Publishers (DFP). Unlike DFP and other closed programmatic systems, header bidding offers greater control over which bidding partners to work with – and enables publishers to see the true value of their inventory.

As programmatic further cements its pivotal role in any successful publisher strategy, there are a number of questions that need to be answered about the header bidding market.

Latency: what is the reality?

The process of header bidding involves adding extra scripts onto a page. Many publishers fear that doing so would result in latency. The reality is that publishers are seeing 11% less latency and 23% fewer passbacks after implementing header-bidding script, according to an eMarketer report from August 2016.

Effective header-bidding wrappers initiate an auction process that actually diminishes latency. Publishers want to work with full-stack systems that invest heavily in their technology infrastructure to increase their monetisation, without degrading the user experience.

Why is transparency still critically important?

Although header bidding creates a fairer auction, it doesn’t alleviate the need for an open and transparent ecosystem. There are still bad actors in the market trying to influence bidding activity and impose biases in their auctions. That poses the threat of a DFP-style set up that biases one adaptor over another. Therefore, it is critically important for publishers to align with independent partners who transparently support their monetisation efforts.

 Supply path optimisation

Header bidding gives buyers easier access to fuller levels of supply. However, the auction mechanics can incentivise aggressive middlemen who maximise their own revenue and profit at the cost of optimal outcomes for both marketers and publishers. A sophisticated buyer can compare the different paths to supply and choose what makes sense for them based on their own criteria. With technology that automatically implements fair, second-price auction dynamics and offers buyers the ability to route their spend in the most cost-effective way.

There are real revenue gains to be made

There is clear evidence that publishers who implement header bidding tend to make more money. 48 percent of publishers in 2016 reported higher CPMs and 31 percent saw increased yield, according to findings from eMarketer from 2016.

Even if header bidding can be complex, it is worth it?

Header bidding can be complex to navigate internally and requires sustained investment of time and money to make it worthwhile. This is because the solution continues to be refined over time and necessitates ongoing coordination between a publisher and its given solution partner. Even so, it’s still much simpler and more profitable when compared to the old, latency-prone waterfall model.

What we foresee coming down the line: more formats and channels

By the end of 2017, programmatically traded ads are expected to account for three-quarters of all UK digital display ad spending.  Given that header bidding will continue to grow seamlessly compatible across all channels and devices, we think it’s smart for publishers to find a partner who can provide these header-bidding capabilities in the long run. The popularity of open-source header-bidding wrappers will also increasingly outstrip closed-system counterparts.

In particular, eMarketer research shows that three-quarters of total programmatic display ad spending will go toward mobile inventory this year. Mobile publishers face similar monetization issues to desktop publishers. The rapid-paced adoption of mobile means there will be the need for a header bidding-like solution that lets publishers manage multiple partners smoothly, empowering them to maximise their revenue and deliver a seamless user experience by reducing latency.

Server-to-server header bidding: Is it really the next big thing?

More than likely, but effective server-to-server implementation hinges on trust between different SSP partners. The expectation is that other SSPs will participate as demand-side partners, and that we’ll all be competing fairly.

Another consideration regarding server-to-server is that any solution will work best in a hybrid capacity. In other words, one should also have a traditional header-bidding wrapper operating alongside it. The combination of the two capabilities grants publishers the flexibility to maximise cookie matching with their header partners and increased bid density through their server partners, all while still managing for latency and optimising for revenue.

Conclusion

More and more publishers now recognise the opportunities header bidding affords them, especially compared to the legacy tech of DFP and older, latency-prone “waterfall” methods. When implemented correctly and maintained efficiently, the technology offers publishers better fill rates and greater monetisation of their inventory – not to mention fuller transparency over their inventory.

While still in its relative infancy, header bidding will continue to acquire greater proficiency across other channels and formats, including mobile and video. This will be accompanied by higher adoption levels of open-source header bidding wrappers from publishers in favour of closed-system equivalents.

Finally, with the growing likelihood of server-to-server implementation, header bidding will ease into the role of being less a revolutionary technology, and will simply be another highly effective means for publishers to increase their monetisation opportunities and take full control over their inventory.

By Nigel Gilbert, VP Strategic Development EMEA, AppNexus