How Does Header Bidding Work?

Header bidding is a programmatic advertising technique enabled by a piece of JavaScript code that sits in the invisible header of a publisher’s website. The technique, also known as pre-bidding, has been around for years and began gaining popularity in 2015. Header bidding changed the ad tech game by giving digital publishers control over the auction, redefining the process by which digital publishers sell ad space to advertisers.   

Before header bidding, publishers and advertisers generally relied on a technique known as the “publisher waterfall.” This old school technique was given its name as it mimics the flow of a waterfall. The approach means approaching bidders based on their performance in the past. At the top, we have the exchange partners that have historically paid the most money. Once the bid is rejected it then cascades down to the next exchange partner. Unsold impressions are continually pushed down to the next tier, until someone finally purchases the impression for a bargain price. Did we mention that this whole process takes place in milliseconds?

With header bidding, the JavaScript code – placed in the invisible header of the publisher’s website – reaches out to all demand partners as soon as the web page begins to load. This essentially simultaneous auction, outside of the adserver, identifies the highest bids on offer for all impressions available – meaning that the price of an impression can significantly increase. Although this might sound like a bad deal for the advertiser, you have to bear in mind that the most wanted ad inventory is now up for grabs for anyone willing to pay the right price. This means that the most sought-after spots no longer go to the historically biggest spenders but to those who are willing to pay the most for the actual impression – driving increased liquidity across the system.

To optimize the header bidding process, header bidding wrappers/containers are utilized. Header bidding wrappers reduce the amount of manual work needed in the auction process and allow publishers to manage their demand partners efficiently. They do this by consolidating the hundreds of line items that header bidding previously required in the publisher’s ad server. This gives publishers the control that they’ve been yearning for and still allows them to choose who they sell to. Wrappers also negate increased page latency and load times, meaning that there is no negative impact on the user experience.  And this whole process happens faster than it takes you to read the word “faster.”

To summarize, header bidding gives digital publishers access to more advertisers, it gives them more control over the auction, in real-time, and it enables them to maximize yield.

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