Commentary

What's Next For Header Bidding?

With publishers adopting header bidding in droves, it’s clear they’re increasing revenue, sometimes dramatically, by replacing their waterfalls. Across the board, eMarketer found 48% of publishers in 2016 reported higher CPMs, and 31% saw increased yield.

Publishers also learned that implementing header bidding properly can improve the user experience by actually decreasing latency. With vendors significantly reducing implementation and deployment time, few publishers can find reasons to resist the shift.

With all the momentum gained in 2016, where is the industry going in 2017? Here’s my take.

Mobile, video, native. This one seems obvious: header bidding will continue to support more formats. With more than half of all U.S. digital video advertising bought programmatically now, the opportunities for publishers to increase video revenues are clear. And with seven out of 10 U.S. programmatic display dollars going to mobile, publishers will want to make sure they have access to all that demand.

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One of the leading mobile social discovery apps, MeetMe, was an early adopter of mobile header bidding and saw over 130% revenue growth during a single quarter in 2016. Even more complex formats like native are growing quickly. Publishers should ask vendors about their plans for infrastructure that can handle multiple channels and formats.

Server-to-Server. While there were many vendors pledging interoperability of server-to-server solutions in 2016, I expect them to become mainstream in 2017. Publishers will discover client-side scalability has limits and learn about the trade-offs between server-to-server vs client-side calls, including latency (not as obvious as some think) and cookie matching (see this article for more).

Publishers should also rediscover the value of working with an unbiased, low take-rate exchange instead of trying to manage dozens of partners themselves. My contention is that best practice will be a hybrid model, with a handful of partners called directly from the client (to maximize cookie match), but most called server-side (to minimize browser calls and increase bid density).

Better analytics and transparency. Header bidding best practices demand that all partners be treated equally, with the same timeouts, ad server priority levels, and bid-bucket granularity.  Publishers should become wise to those vendors who recommend different setups in the ad server to try and win an edge at the publisher’s expense, and should demand that their wrappers do not bias any participant.

As an example, Underdog Media, a media technology company that generates ad revenue for digital publishers, has found that the level of transparency and control with prebid.js enabled them to discover impressions that were frequently sold below true market value. Since prebid.js is free and open source, they could see and fix the inefficient ad server setup themselves. The result? CPMs grew 51% over two months.

In addition, publishers often aren’t clear how to maximize competition between direct and programmatic. Vendors are already using foundational technologies like prebid.js to build analytics to help publishers optimize allocations across direct, private marketplaces, and the open market. Across the market, I expect to see continued streamlining of the pipes between buyers and sellers, as these tools drive efficiency in the supply chain.

Buyers learn about header bidding. While header bidding has been great for publishers, it has been a mixed bag for buyers, who are delighted to see more premium supply but are paying for it with increased costs to bid and process the same impression multiple times. Smart buyers are also detecting which header bidding auctions are first-price and reducing their bids accordingly.

As publishers rush to add additional partners via server-to-server connections, buy-side technology players should partner with low take-rate supply-side vendors to reduce this overhead and improve auction dynamics.

Recommendations

If you haven’t jumped on the header bidding bandwagon, now is a good time so you don’t lose any more revenue. If you are already on it, continue to optimize your partners, and demand more analytics to ensure you are maximizing yield. In any case, confirm you are working with partners who are in the business for the long term and will continue to support new formats and innovations that drive efficiency.

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