Moving Toward A Holistic Approach: Yield Management & Header Bidding

  • by , Op-Ed Contributor, August 12, 2016
The past months have seen a lively discussion about holistic yield management (HYM) and header bidding (HB). Let’s outline the differences.

HB (sometimes called pre-bid or advanced bidding) is an upstream bidding process designed to maximize monetization of impressions. HYM efficiently manages the interaction of traditional and programmatic inventory to maximize the revenue of the entire inventory. HB can be part of the HYM strategy. HYM strategy isn’t necessarily a part of HB.  

HB lets a publisher or ad network access multiple demand platforms to assess the inventory’s real value. The pre-bidding process takes place before actual bidding, which -- if successful -- would yield immediate ad delivery. Technically, publishers and Web site owners implement HB through a specific tag wrapped in the website header. This lets the demand side submit bids before the ad server/supply-side platform (SSP) request.

Thus, HB has two advantages: It fosters bid value transparency, and it eliminates the waterfall principle used to access inventory clusters. HB disadvantages include setup costs and website-loading latencies. HB also requires the publisher to manage different user Interfaces, without centralized control, and it’s challenging to get an aggregated monetization report. Finally, by wrapping the tags of different ad vendors on their pages, publishers relinquish control of their inventory. HB thus supports price arbitrage, which hurts publisher revenues.

Turning to HYM: Under classical yield management, ad networks and publishers try to maximize revenue based on demand-oriented inventory allocation (guaranteed and performance-driven).

With programmatic buying, the supply side first tried to optimize both types separately (programmatic was for remnant only). Then came HYM.

HYM aims to merge all demand sources and inventory types (guaranteed, performance, networks, RTB and programmatic direct) and assess their value simultaneously.

A traditional SSP lacks access to a publisher’s full inventory, seeing only the inventory assigned for programmatic monetization. Thus, the SSP’s optimization scope (CPM, revenue) remains limited, because it doesn’t interact with other inventory resources. To remedy this, the industry adopted the real-time advertising auction-based buying of online media based on audience data.

However, within a supply platform, predefined priority levels and processes organize demand sources. Rules define a recurring sequence of impressions. With this sequence-based mechanism, demand sources get bid requests systematically and sequentially. The same impression sequence may be offered to a single demand source multiple times. There are better ways to maximize revenue.

The structure of a fully integrated platform transcends sequence-based logic. It integrates programmatic buying into ad delivery logic while taking account of all monetization types (direct, guaranteed, performance and programmatic).

We know it’s unhelpful to call the same demand sources multiple times within a short time frame.

Under the holistic yield paradigm, programmatic and direct can synchronize. The holistic technology accesses the entire inventory and merges the programmatic segment based on internal forecast data: for example, how much volume is still available for my guaranteed campaigns?

Some ad networks and Web site owners focus on the highest CPM, which ignores the role of the ad-fill rate. When analyzing the value chain across all inventory clusters, RPM (revenue per thousand impressions) valuations should play a greater role.

Using a fully integrated technology solution (a.k.a., a full-stack technology platform) that supports the holistic approach is a question of more than technology. Heads of programmatic and direct-sales execs will always try to achieve their own best results. A holistic structure enables a focus on monetization as a whole, rather than a specific buying type.

HB is an appropriate tool in a yield management strategy, but it’s just one such tool. It can’t replace a holistic approach.

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