• by Tobi Elkin , Staff Writer @tobielkin, February 10, 2016

In the programmatic media universe, you can't start a conversation these days without bumping into header bidding or ad blocking. Of the two, ad blocking seems to be the easier topic to discuss.

Almost everyone has an opinion on ad blocking from a personal and professional perspective. But header bidding? Not so much. The conversation invariably leads down a rabbit hole of waterfalls (definitely not the kind you discover in beautiful places), "primary growth drivers," "monetization," "pre-bidding" and more.

OK, here's a working definition of header bidding. Please feel free to weigh in and tell me I've got it all wrong.

Header bidding, as I understand it, is basically advance bidding or "pre-bidding" on advertising inventory. It uses a programmatic process in which publishers offer up ad inventory to multiple ad exchanges at the same time, before making calls to their ad servers. The idea is that by permitting several demand sources to bid on the same inventory at the same time, publishers can significantly boost their yield and make more money.

Here's how Sam Cox, VP of global partnerships at MediaMath -- and a very smart guy -- explains it:

The header gives you the ability to see 100% of publisher's audience. With most exchange-based bidding, you only get exposure to a fraction of the publisher's inventory.

"If someone has a header tag in place, [a little piece of code], I can see every user against every placement," Cox said.  "The publisher is the client of the SSP. When it places the header down, every user and every placement generates an exchange call. Normally the exchange doesn't get called until the ad servers run through all the guaranteed campaigns. The DSP only sees what wasn’t consumed."

Cox, explaining this to me on a magical whiteboard, goes on to say: "Ideally a buyer wants to to see every user and [have] a genuine opportunity to win every user. A header with a line item that the header corresponds to is the first priority in the ad server. I can see 100% of the inventory and I have the potential to win 100%." That's a lot of transparency, so there's tons of potential there.

The header, for all intents and purposes, is a piece of Java script that sits on the publisher’s website. Programmatic inventory is activated through the header that sits on a page with Java script and can set  the same series of events into motion that typically take place, but the process happens in parallel with the ad server.

Some experts think that header bidding will have more impact on video than display inventory because video is constrained a bit by supply. And the vast majority of video impressions are sold upfront, so this hides the inventory from a buyer’s strategy.

The main benefit, according to people I've spoken with, is that publishers can increase their yield. Some publishers cite 200% to 300% increases in yield after they begin using header bidding. Header bidding also enables vendors who offer it to expose more buyers to more inventory, which has a huge impact on viewability.

And header bidding is like an attack on that waterfall I referred to earlier. In other words, header bidding gets publishers away from the waterfall effect. If an ad loads slowly, before it starts rendering, header bidding can reduce a lot of latency. The ads can load faster, thus creating a better experience for readers.

Andrew Casale, president and CEO of Index Exchange, explained it to me this way: “The traditional way publishers have sold digital media up to this point is that a sales rep meets with an agency, lands a deal and sells a piece of inventory, and it makes to the top of the publisher waterfall. Traditionally, what was unsold would move to the RTB market.”

The RTB market, for better or worse, is perceived as low-cost inventory and a wasteland where no one wants to be. According to Casale, the sea change is that with the header, if you expose 100% of inventory to the programmatic market, publishers can then show all the inventory they have and find the best half of the inventory. 

So what's the downside to header bidding? Who's using it and who's not? And if not, why not? Complexity may have something to do with it.

What are your thoughts?