Header bidding: From a publisher’s dream come true to a mixed blessing

The world of ad tech is nothing if not disruptive. Since its debut only three years ago, header bidding has become one of the fastest-growing programmatic advertising solutions to date, with just over half of publishers (53%) now using the technology to monetise their inventory. High-profile publishers such as The Guardian have led the way by taking advantage of header bidding technology to maximise yield and minimise wasted impressions.

A publisher’s dream come true?

Header bidding has been hailed as the saviour of programmatic as it provides advertisers with access and opportunity in the bidding process, and because of its innate ability to prevent tech giants from dominating the market through unfair business practices. It enabled publishers to capture full and fair market value for their inventory.

Exceptional revenue results contributed to the rise in popularity of header bidding and drove publishers to deploy multiple solutions to secure the most competitive bids from a larger pool of advertisers. In fact, our internal data shows that the average publisher is now implementing between five and 15 header bidding solutions at any one time. Although this seemed like the most logical next step to amplify the benefits of header bidding, it hasn’t come without repercussions.

Consequences of too many header bidding partners

Amid the header bidding frenzy, it’s now clear that each time a publisher adds a new demand source to one of its pages, the user’s browsing session becomes more susceptible to a whole host of technical difficulties including latency (slower-loading pages); disparity and therefore incompatibility between header bidding code and webpage code; and compromised ad quality.

In addition, most header bidding partners sit within the user’s browser – which has a limited capacity to facilitate the transmission of multiple bidding data on top of on-page content and advertising. This has inevitably led to clogged browser pipes that not only negatively impact advertisers’ ability to send in a bid and compete, but also detracts from the overall user experience by slowing down the page.

Beyond the direct impact on publishers, these redundant header bidders have caused a series of headaches for buy side players. Buyers are now seeing the same impression several times, and with no signal to identify where the other bids are coming from, they often bid in each auction. In addition, the cost to process this influx in requests has put a tremendous financial strain on demand side platforms (DSPs), whose algorithms were never designed to handle this dynamic. As a result, DSP win rates have plummeted which may impact future spend.

Containing the complications

As with any solution, there is bound to be some level of technical debt, i.e. a requirement for additional resources and development to iron out initial glitches. Meanwhile, it’s clear that header bidding is here to stay.

With this is mind, technology companies brought container solutions to market as a way to add efficiency and ease to the management of header bidders. Containers eliminate some of the issues that arose with header bidding proliferation – management of multiple partners, simplification of implementing numerous partners and some level of consolidated reporting and timeout controls – allowing publishers to monetise their ad space effectively once again.

Though the promise of container technology has captured the attention of publishers, these solutions don’t come without their own shortcomings. The rush to build and adopt containers that don’t yet run on industry standard protocols (e.g. OpenRTB) can have severe consequences on publisher yield. Dramatically reduced control, limited ad quality protections and having to maintain a close watch on container companies to fend off mysterious, or biased, behaviour are just some of the symptoms publishers have encountered after jumping into the fray too early.

Header bidding has certainly taken the ad tech industry by storm, and for publishers to continue to reap the impressive revenue benefits this technology offers, they need to be sure they are working with the partners that have their best interests in mind. As they continue to navigate a changing landscape, publishers should be proactive and take control of their monetisation strategy. By making their technology partners answer the hard questions and, most importantly, demanding the transparency they need, they can rest assured they’re maximising their revenue potential.

Richard Kidd, vice president and head of business development, OpenX