Key Takeaways

• Header bidding allows publishers to offer inventory to multiple ad exchanges simultaneously (not sequentially)

• Publishers typically see 20-40% revenue increases when implementing header bidding

• About 70% of US publishing websites now use header bidding technology

• Two main types exist: client-side and server-side, each with different advantages

• Prebid is the dominant open-source solution powering most header bidding implementations

What Exactly Is Header Bidding and Why Should You Care?

If you're a publisher trying to maximize ad revenue, you've probably heard people talk about header bidding like it's the best thing since sliced bread. But what is it exactly, and why does it matter?

Let's break it down: header bidding is a programatic technique that allows publishers to offer their ad inventory to multiple ad exchanges simultaneously before making calls to their ad servers. This happens through JavaScript code placed in the header section of a website (hence the name).

The big deal? It completely upended the traditional "waterfall" method, where inventory was offered to one ad exchange after another in a pre-determined sequence. That old approach meant that often, your inventory would sell for less than what someone else might have paid for it, simply because they weren't first in line.

Header bidding changed the game by creating a real-time auction where multiple demand sources compete at the same time. It's like having several potential buyers in a room bidding against each other, rather than showing your product to one buyer at a time who might or might not be interested.

The Evolution: From Waterfall to Auction

To really get header bidding, you need to understand what came before it. The waterfall model (also called daisy-chaining) worked like this:

1. Publisher offers inventory to Premium Network A

2. If not sold, offer to Network B

3. If still not sold, offer to Network C

4. And so on down the line...

This sequential approach had some major problems:

• Lower-tier networks never got a chance at premium inventory

• Higher-tier networks never paid more than they had to

• Publishers lost revenue by not creating true competition

With header bidding, all these demand sources get to bid at the same time. This creates true price discovery and ensures publishers get the actual market value for their inventory.

According to AdMonsters, recent studies show header bidding implementation leads to a 23% increase in fill rates and about 20% higher CPMs. Some publishers see even better results, with revenue increases of 30-40% reported by Publift and others in the industry.

How Header Bidding Actually Works

You've probably seen flowcharts showing header bidding, but let's take a more pratical approach to understand the mechanics:

1. User visits your website - The page begins loading

2. Header bidding code activates - JavaScript in the page header executes

3. Bid requests sent simultaneously - Your wrapper sends requests to all demand partners

4. Partners evaluate the impression - SSPs and exchanges determine how valuable the user is

5. Bid responses return to the browser - All bids come back within a timeout period (usually 400-800ms)

6. Winning bid passed to ad server - The highest bid gets passed as a key-value to your ad server

7. Ad server decision - Your ad server compares the header bidding bid against direct-sold campaigns

8. Highest overall bid wins - Whichever demand source bid highest serves the ad

The beauty of this process is that it puts all demand sources on equal footing. Your directly sold campaigns still get priority if they offer more value, but programmatic advertising buyers can outbid them if they're willing to pay more.

Client-Side vs. Server-Side: What's The Difference?

Header bidding comes in two main flavors: client-side and server-side. Each has its pros and cons.

Client-Side Header Bidding

This is the original form of header bidding, where all the auction logic happens in the user's browser.

Advantages:

• Complete transparency for publishers

• Higher match rates for user IDs (better targeting for personalized ads)

• Easier to implement and troubleshoot

Disadvantages:

• Can slow down page load times

• Limited number of demand partners (5-7 max recommended)

• Increases browser resource usage

Server-Side Header Bidding

This newer approach moves the auction process from the browser to a server.

Advantages:

• Faster page load times for users

• Can support many more bidders (10+ partners)

• Less resource-intensive for the browser

Disadvantages:

• Lower cookie match rates (typically 20-40% lower)

• Less transparency into the auction

• May require additional setup or fees

According to Snigel, server-side bidding is gaining popularity because it "allows for faster and more efficient ad decision-making, as the ad server does not have to wait for each DSP to respond before moving on to the next."

Many publishers are now implementing hybrid solutions that use both methods - client-side for premium inventory where user matching is critical, and server-side for less valuable inventory where speed matters more.

Header Bidding Wrappers Explained

If you're going to implement header bidding, you'll need what's called a "wrapper" or "container." This is the code framework that manages all your header bidding partners and sets the rules for the auction.

The wrapper handles critical functions like:

• Setting timeout limits

• Managing bid responses

• Passing winning bids to your ad server

• Organizing analytics data

There are two main types of wrappers:

1. Open-source wrappers - Like Prebid.js, maintained by Prebid.org

2. Proprietary wrappers - Offered by companies like Amazon, PubMatic, or Index Exchange

Prebid has become the industry standard, with PubMatic noting that "Prebid is an open source header bidding ad server" that offers transparency and flexibility. As an open-source solution, Prebid lets publishers customize their setup without being locked into a single vendor.

Proprietary wrappers often claim better performance or special features, but they typically limit your ability to work with certain demand partners or make changes independently.

Implementation Challenges and Solutions

Let's be real - header bidding isnt a plug-and-play solution. Publishers face several common challenges when implementing it:

1. Latency Issues

Adding multiple bidders increases the time before ads load. To address this:

• Set appropriate timeouts (usually 400-800ms)

• Implement lazy loading for below-the-fold ads

• Consider server-side bidding for some inventory

2. Configuration Complexity

Header bidding requires technical expertise to set up correctly:

• Start with fewer partners and add more gradually

• Test different price floors to find the optimal balance

• Regularly review performance and adjust accordingly

3. Data Management

With so many partners bidding, analyzing performance becomes challenging:

• Invest in analytics tools that can aggregate header bidding data

• Look for patterns in which partners perform best with certain inventory

• Test removing underperforming partners to reduce complexity

According to Adtelligent, one success story is 1+1 media, which saw "25% ad sales income growth" after implementing header bidding. This shows that despite the challenges, the revenue potential makes the effort worthwhile.

The Future of Header Bidding

Header bidding continues to evolve, with several important trends shaping its future:

1. Identity Solutions

With third-party cookies disappearing, header bidding is adapting to use alternative identity solutions:

• Prebid now supports identity modules like ID5, LiveRamp, and Unified ID 2.0

• First-party data strategies are becoming essential

• Contextual targeting is making a comeback

2. Moving Beyond Display

Header bidding started with display ads, but it's expanding to other formats:

• Video header bidding is growing rapidly, including pre-roll ads

• CTV (Connected TV) implementations are gaining traction

• Audio and in-app header bidding solutions are developing

3. Machine Learning Optimization

The next frontier is using AI to optimize header bidding:

• Dynamic timeout management based on user behavior

• Predictive analytics to select the best demand partners per impression

• Automated floor price optimization

As AdPushup reports, adoption of header bidding continues to grow, with 2.6% of the highest-traffic million websites using the technology as of 2022 - a number that keeps increasing.

Is Header Bidding Right for Your Site?

Header bidding isn't a perfect fit for every publisher. Consider these factors when deciding:

Good candidates for header bidding:

• Mid to large publishers with significant traffic

• Sites with diverse audience demographics valuable to advertisers

• Publishers with technical resources to manage implementation

Maybe not ideal for:

• Very small sites where implementation effort exceeds potential gain

• Publishers fully satisfied with their current Google AdSense earnings

• Sites without technical resources to troubleshoot issues

If you do decide to implement header bidding, start small:

1. Begin with 3-5 trusted demand partners

2. Use an established wrapper like Prebid

3. Set conservative timeouts

4. Gradually optimize and expand

Frequently Asked Questions

Does header bidding slow down my website?

Client-side header bidding can impact page load times if not implemented properly. However, with proper timeouts and lazy loading for below-the-fold ads, the impact can be minimized. Server-side header bidding offers an alternative with less impact on page speed.

How much revenue increase can I expect?

Most publishers see a 20-40% revenue increase after implementing header bidding. Your results may vary depending on your current setup, audience, and the demand partners you work with. Many publishers track improvements in RPM or Page RPM to measure success.

Is header bidding compatible with Google Ad Manager?

Yes, header bidding works well with Google Ad Manager (GAM). In fact, most publishers use GAM as their ad server when implementing header bidding, passing the winning bid as a key-value to compete against direct-sold campaigns.

How many demand partners should I work with?

For client-side header bidding, 5-7 partners is generally recommended to balance revenue potential against latency concerns. With server-side, you can work with 10+ partners without significant performance impacts.

Is Prebid the best wrapper solution?

Prebid has become the industry standard due to its open-source nature, transparency, and flexibility. While proprietary solutions may offer specific advantages, Prebid provides the most control and is supported by most demand partners. Prebid Server is also gaining popularity for server-side implementations.