Header bidding allows multiple ad exchanges to bid on the same inventory at the same time, which allows publishers to sell more inventory at higher prices. But it has created new problems, which need to be resolved.
It is one of this year’s hot trends in programmatic trading, but it was invented back in 2009 and has gained popularity with publishers and advertisers over the last two years. The use of header bidding has grown so much that BI Intelligence estimates that almost 70% of publishers are now using header bidding technology, compared to almost none in 2015.
Header bidding has produced positive outcomes both for publishers (by allowing them to maximise the value of every impression) and for advertisers (by giving them potential access to more valuable inventory). But it has also introduced new tensions that will need to be addressed, so that the programmatic market can become more transparent and effective for all of its stakeholders.
The main downsides of header bidding are:
• It causes a large increase in the number of ad calls per page, which can slow down access to a page’s content and provide a poorer experience for the website’s visitors.
• Because ad exchanges send more ad impressions per second, DSPs must deal with ever increasing
volumes of impressions, adding to their costs. This makes it more difficult for smaller DSPs to operate profitably, threatening to reduce the overall competitiveness of the programmatic industry.
• As it increases the yield of a publisher’s inventory, it also increases the cost per action for advertisers. This reduces the ROI and will cause brands to start to shift budgets to more cost-effective channels, defeating the initial purpose of maximising inventory value.
As header bidding tries to solve imperfections in the programmatic landscape, it also introduces its own. We need to ensure that programmatic technology continues to bring positive changes for advertisers by removing transparency issues and creating performance gains.