What Is Header Bidding?
What is header bidding? Are you in the business of digital advertising or run a website or app that displays advertisements? Then you would have certainly heard this term many times. The term itself may seem complicated, but in simpler terms, it is nothing but giving an opportunity for many advertisers to compete for the same ad space at once instead of giving only one advertiser a chance first.
Traditionally, in digital advertising, there was something called the waterfall method. In this method, advertisers were called in order. Suppose an advertiser was called first and he wanted to buy that ad impression. Then it was over. The issue here is that maybe the second advertiser in line was actually willing to pay more for that ad impression. However, he was not given a chance.
With the introduction of header bidding, this issue was fixed. Now, many advertisers were given a chance at once. This led to healthy competition for ad space. This is why header bidding became an integral part of programmatic advertising. To understand this better, it is important to first understand how programmatic advertising works and how ads are bought and sold automatically.
How Header Bidding Works
In order to understand the process of header bidding, it is important to think of the process of an auction taking place in just a few milliseconds when the page loads. The moment the user wants to open a webpage or an application, the request is sent to all the advertisers. Then, all the advertisers respond with their bids at the same time. The highest bidder gets the chance to display the ad. This entire auction is part of the larger programmatic advertising process, where advertisers bid for impressions in real time while a webpage loads.
The whole process takes place in such a short time that the user does not even get a chance to realize that the process has taken place. For the user, the webpage or application simply loads. However, in the background, the process of an auction has already taken place.
The process looks like this:
- The user wants to open the webpage or application.
- The request is sent to multiple advertisers.
- The advertisers respond with their bids.
- The highest bidder is chosen.
- The ad is displayed to the user.
The important thing to remember is that every advertiser gets the chance to participate in the auction. This is the main idea behind header bidding.
Header Bidding vs Waterfall
When people refer to the debate over header bidding and waterfall, they are actually referring to the debate over two different models of advertising.
The waterfall approach is based on the idea of priority. The first advertiser gets the first turn, the second advertiser gets the second turn, and so on. The priority is usually based on historical data. However, this is not actually a competitive process because the process ends when the first advertiser agrees to buy the ad.
The header bidding approach was developed because of the lack of competition in the waterfall approach. In the header approach, all the advertisers are able to bid at the same time. The decision is based on the willingness of the advertiser to pay the highest amount at any given time.
The header approach usually results in:
- More competition
- More transparent
- More effective
- Less dependence on demand partners
Server Side Header Bidding
Server-side header bidding is somewhat more advanced than header bidding. Normally, in header bidding, the bidding process occurs in the browser of the user. However, in cases where there are numerous advertisers, the speed of the page may be affected.
Server-side header bidding is somewhat more efficient than normal header bidding in the sense that the bidding process occurs not in the browser but in the server. This makes the page load faster and improves the speed of the page, which is essential in large sites and mobile apps.
However, in server-side header bidding, there is sometimes less information available compared to normal header bidding, which affects the willingness of advertisers to bid. As a result, most organizations combine the two and use them together in a setup referred to as a ‘hybrid setup.’
Header Bidding Wrapper
Essentially, a header bidding wrapper is a tool that assists in managing all the advertisers who are currently using header bidding. Manually attempting to connect all of the advertisers one by one can get quite messy.
The header bidding wrapper essentially manages all of this in one place, including:
- When to send bid requests
- How long to wait for bids
- Which advertisers to include
- How to run the auction
There are several companies that offer a header bidding wrapper, such as Prebid, which make it easier to manage header bidding.
Why Header Bidding Became So Popular
There is a reason why header bidding became so popular in programmatic ad selling. It fixed a problem that was occurring in the waterfall system, and that problem was a lack of competition.
When there are more advertisers competing for the same ad space, the higher the probability of receiving a better price. However, aside from the revenue, there are also other advantages that can be derived from the use of header bidding.
Some of the most significant advantages are:
- More competition for ad inventory
- More transparency in the auction
- More control of the demand partners
- No need for a single platform
- More efficient monetization
Over time, header bidding was no longer considered an experiment but a standard part of programmatic selling.
Is Header Bidding Right for Everyone?
Although header bidding is quite effective, it does not automatically qualify it for every possible scenario. The most effective way that header bidding can be used is when there is enough traffic and enough demand partners to generate competition.
When there are just one or two advertisers, the header bidding will not make any huge impact because there is no competition. It is also important to note that header bidding is not just set and forgotten. However, when the environment is such that programmatic advertising is quite important, the header bidding can make a huge impact. Many businesses work with professional header bidding services to implement and manage the setup properly without affecting site speed or user experience.
Final Thoughts
So, coming back to the original question, what is header bidding? It is nothing but a way to allow all the advertisers to bid for the ad space at the same time instead of one by one. This way, there is a fair auction, which is beneficial for all, and the selling of ads is an efficient process.
Header bidding revolutionized the way auctions were conducted in programmatic advertising. It introduced a new system of auctions, which was based on competition, rather than priority. And in most cases, competition leads to better things.
This is the reason why header bidding is now considered an important aspect of programmatic advertising. If you want to understand how auctions, demand partners, and ad tech platforms work together, structured programmatic advertising training can help you understand the ecosystem in a practical way.
Companies that want to improve their advertising strategy and auction performance often work with a programmatic advertising agency that helps manage demand partners, auctions, and monetization strategy more effectively.
FAQs
How does header bidding work?
Header bidding is a method where bids from multiple advertisers are sent at the same time. The advertisers then make their bids, and the highest bidder is given an opportunity to display their ad.
What is the difference between header bidding and RTB?
RTB stands for real-time bidding. It is an auction where advertisers compete with each other by bidding on impressions. Header bidding is a method that involves multiple real-time bidding partners bidding at the same time before an ad server is called.
Why is it called header bidding?
This method is called header bidding because bidding takes place in the header section of a webpage or an application before an ad server is called.
What are the types of header bidding?
The types of header bidding include client-side header bidding, server-side header bidding, and hybrid header bidding.