Header bidding

This approach stands in contrast to the traditional waterfall method, which involves offering inventory to one ad exchange at a time in a sequential manner based on historical performance data.

Traditional methods tend to prioritize direct deals and then pass any unsold inventory down the waterfall to ad networks and exchanges in a tiered approach.

Once these direct ad spots were filled, the remaining inventory was offered to demand partners in a sequential manner through the waterfall method.

In this setup, demand partners, such as Supply-Side Platforms (SSPs) or ad networks, were ranked based on their size and historical performance, creating a hierarchy where the top-ranked partners got the first look at the available inventory, often resulting in suboptimal revenue for publishers due to sequentially decreasing Cost Per Mille (CPM) prices and limited access to premium ad inventory for advertisers.

The inefficiencies and revenue limitations inherent in the waterfall model prompted the industry to seek better solutions, which led to the development of header bidding.

[7] It was around 2015 when the technology gained wider recognition, with industry publications like AdExchanger's famous article titled 'The Rise Of ‘Header Bidding’ And The End Of The Publisher Waterfall'[8] marking a new era in programmatic advertising.

In the following years, open-source projects like Prebid.js,[11] developed by AppNexus in 2015, played a pivotal role in facilitating the widespread adoption of header bidding by simplifying its implementation for publishers.

Header bidding is a programmatic advertising technology[13] that allows publishers to offer their ad inventory to multiple demand partners in real-time.

[31] Unlike the web environment, in-app bidding does not rely on browser headers[32] but on the app's codebase and cloud-side auctions managed by the server-side platforms.

[37] This implementation enables publishers to leverage the competitive advantage of header bidding, ensuring that their ad inventory is sold at the highest possible price through a real-time auction that is fair and transparent.

The technology ensures transparency and maximizes yield by allowing publishers to sell their inventory to the highest bidder, rather than being locked into pre-negotiated prices or sequential bidding processes.

[41] The introduction of header bidding has significantly altered the dynamics of ad pricing and revenue generation in the digital advertising ecosystem.

[43] This competition has led to an increase in the Cost Per Thousand Impressions (CPM) that publishers can charge, directly impacting their revenue in a positive manner.