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What is header bidding and is this the end of it?

In online display advertising, publishers used to utilise their ad inventory for direct and network deals first and then release their unsold/unused impressions to ad exchanges to be bid on programmatically. Then in 2010, Google’s DoubleClick Ad Exchange released ‘Dynamic Allocation’ which allowed publishers to accept programmatic bids in competition with their direct deals, which publishers loved as it meant increasing their yield.

An example of this would be if due to Google’s wealth of search and browsing data it knew a user was in-market for flights, then travel advertisers would be willing to pay more for that impression than the direct deal the publisher would have otherwise allocated the inventory to. The way in which this worked is that DoubleClick for Publishers (used by the majority of publishers to sell their ad inventory) allowed the DoubleClick Ad Exchange the opportunity to compete against the publisher’s direct deals. This was good for publishers as their yield improved and was good for advertisers as they were accessing this valuable inventory more easily. But exchanges outside of the DoubleClick Ad Exchange were not getting a fair look in – this is where ‘Header Bidding’ came along.

Header bidding involves publishers placing a piece of code in the header of their webpages that allows exchanges outside of the DoubleClick Ad Exchange to compete with publishers’ direct deals and DoubleClick Ad Exchange bids. This means more real-time demand, which is better for publishers and better for advertisers. DoubleClick, aware that this was happening and the negative light it put them in for somewhat exploiting their dominant market position, recently opened up their Dynamic Allocation to all exchanges rather than just their own which resolves the issue and need for header bidding. There are still challenges however as technology costs and bids could be inflated by advertisers trying to access the same inventory from multiple exchanges – this is why the header bidding discussion continues.

This is a positive progression for programmatic buying. Publishers’ revenue should increase, giving them scope to improve content as well as take a more quality over quantity ad placement strategy, helping with ad blocking. Advertisers will be able to access valuable users through impressions that previously had to waterfall down a hierarchy of deals before they became available. Win, win.