• by Chip Schenck , Op-Ed Contributor, March 17, 2017

The rise of header bidding has been championed by publishers as a way to increase control and grow revenue. Server-to-server solutions take the process a step further, promising reduced page latency and increased access to demand.

But as header bidding continues to proliferate, publishers are now faced with a new choice: Maximize yield or provide preferential treatment to select advertisers? That is, should publishers continue to use programmatic to maximize RPM, or should they favor their direct advertisers over those bidding in exchanges? Or do they need to strike a balance — and if so, how?

Over the past few months, we have witnessed the beginning of a mindset shift in which publishers are starting to divide their advertising clients into two buckets: transactional and strategic. This mindset shift will have a long-term impact on how and in what context publishers work together with advertisers.

In the last decade, publishers faced downward CPM pressure from a variety of sources. The downward pressure came from the glut of new inventory that became available to buyers, first via ad networks and subsequently via exchanges. As supply grew faster than demand, prices went down. As advertisers recognized the need to separate quantity from quality, private marketplaces (PMP) helped publishers even the playing field, but still captured only a small portion of client spend.   

Header bidding offered a solution to years of price pressure, letting publishers sell each individual impression to the highest bidder. Prices rose from the outset. This newfound pricing power has presented a challenge for publishers who need to balance yield with growing direct advertiser partnerships.

Preference and yield are often competing goals. With header bidding and server-to-server, the auction can be leveraged for either goal. Still, you can’t optimize for both goals in a single auction. Publishers must now do the hard work of determining whether each impression should be delivered within a yield strategy or awarded to a preferred advertising partner.

The result is a new kind of relationship between publishers and their clients. In this new world, the same client can be treated as a yield advertiser in one campaign, and as a preferred advertiser in another. For example, in one campaign, a CPG advertiser may simply seek the most efficient impressions; in another, they may need to achieve specific audience, scale or frequency targets, which may only be met if they are given preference within the auction for certain impressions.

This shift, however, is better for advertisers. The indirect benefit of header bidding, after all, is that it lets advertisers leverage the strengths of both the auction and of buyer choice, while letting publishers grant preference to strategic partners as needed.

So, the real question isn’t yield or preference, it’s actually a question to the advertiser: What kind of partner do you want to be? Are you a transactional, campaign-driven partner? Or are you a longer-term partner, working with the publisher to learn and improve performance collaboratively? Publishers, in turn, can now make the choice to serve their best customers however they see fit.

Publishers: 2017 is year of placing your bets.  Your best horses may be your previous horses, or they may be other horses who want to grow together with you. Below are three key steps taking advantage of both yield and preference in your business:

Change your mindset. Segment clients into strategic and transactional buckets. Who is there for the long haul to learn and grow collaboratively?

Let transactional partners compete on price. This will help ensure you maximize yield when that matters most.

Go deeper with strategic partners. Determine how to use the auction to meet your best partners’ goals, as well as which assets should be given preference in each campaign. (Strategic clients are more likely to listen to bid guidance from your sales team.)

As we enter this brave new world of header bidding and publisher control, rejoice. But also look ahead. The impact of how you treat your partners today will have long-term consequences on your business in the future.