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Trends in Digital Advertising: How is Header Bidding changing the game?

Digital advertising isn’t standing still, and Header Bidding is one of the fresh innovations. With it, publishers can receive bids from multiple advertisers at the same time, which increases their revenue and makes monetizing sites more efficient. According to Forbes research, Header Bidding techniques can increase revenue by 20-40%. This technology overcomes the limitations of traditional methods such as Waterfall bidding, which often resulted in underestimating ad inventory. Unlike the outdated models, where bids were considered one at a time, Header Bidding allows for a here-and-now auction, for everyone who wants to buy ad space at once. In the context of Header Bidding vs Waterfall the former makes the pricing process more competitive, and therefore — more open and fair.

Header Bidding vs Waterfall

CriterionHeader Waterfall 
Availability for advertisersAll advertisers at onceSerial access
Revenue maximizationHighLimited
Difficulty of integrationAverageLow

While the Waterfall method sends ad requests to networks or exchanges in a cascading order, which can reduce potential revenue due to lack of competition, such programmatic advertising platforms as SmartyAds offers a strategy that maximizes publisher revenue through a competitive Header Bidding environment. Pitting Header Bidding against Waterfall is not a matter of strategy, but a matter of survival: Do you stay in yesterday’s day to habitually depend on publisher goals, technical capabilities and target audience demographics, or do you move with technology? Let’s talk about that choice and its implications.

How does Header work?

In the Waterfall model, publishers bid their ad inventory one by one to different ad networks that are not competing with each other. Header Bidding is a programmatic ad inventory buying technology that allows publishers to bid their ad space at the same time on multiple ad exchanges prior to the main auction. Unlike the previous model, where one ad server takes priority over others, pre-bid ad inventory management allows all advertisers to bid at one time, creating a fairer and more transparent bidding environment. In terms of algorithm, this works as follows:

  1. Setup: The publisher integrates a piece of JavaScript code, known as the Header Bidding wrapper, into the website’s header.
  2. Bid Request: When a user visits the website, the Header wrapper sends out bid requests to multiple demand partners (like ad exchanges, SSPs, DSPs).
  3. Bid Response: Demand partners respond with their bids for the ad inventory.
  4. Winner Selection: The highest bid is selected, and the winning bid information is sent to the ad server.
  5. Ad Display: The ad server uses the winning bid to decide which ad to display to the user.

Waterfall vs. Header Bidding

Everything is a comparison. In the online advertising terms, two approaches stand out: Waterfall and Header Bidding. Let’s explore the differences:

1) Waterfall Model:

  • Publishers sequentially offer their ad inventory to different ad networks.
  • Each network gets a turn, but they don’t compete with each other.
  • The process can be slow and lacks real-time optimization.
  • One ad server has priority, potentially limiting revenue.

2) Auction-based ad placement:

  • Publishers simultaneously offer their inventory to multiple demand sources.
  • All advertisers bid at once, creating healthy competition.
  • The highest bidder wins the impression.
  • Transparency and fairness are key.

A Look Beyond Pre-bid ad inventory management

Header Bidding, like any other innovation, has its drawbacks and problems. It comes with technical challenges: additional requests to the server increase page load times, which can degrade the user experience. The complexity of integrating programmatic advertising technology and platform management can also be a challenge for advertisers and publishers. In response to technical objections, 5G technology is already becoming more prevalent and infrastructure improvements and process optimizations are being considered, SmartyAds share insights. Alternatively, many publishers are looking at technologies such as Programmatic Direct and Private Marketplaces, which offer efficiency and control over ad sales with fewer technical requirements. These technologies can be a good compromise, combining ease of management and high performance without overloading the infrastructure.

Final judgment: The future of Pre-auction ad inventory monetization

Analysts predict that in the next 3-5 years, Header Bidding will radically change the landscape of digital advertising: innovations in this area will bring improved ad personalisation, more precise targeting and automated processes, all of which will make advertising campaigns more effective and less intrusive. However, despite the optimistic outlook, there are also potential obstacles awaiting ad marketers — data privacy concerns and increased regulation that could limit the use of auction-style ad monetization.

Futurologists look further ahead, they agree that Auction-based ad placement will become a key element in the digital advertising industry, but its role may change. They expect to see Header Bidding integrate with other technologies to create more flexible and scalable advertising systems. Examples of integration technologies that could have an impact include:

  1. Neuromarketing, which uses knowledge of the brain to develop more effective marketing strategies.
  2. Artificial Intelligence (AI) and Big data are enabling the analysis of vast amounts of information to create personalized advertising campaigns to increase their effectiveness and reduce ad spam.
  3. Augmented reality (AR) and virtual reality (VR) are already transforming retail, creating interactive shops that offer shoppers an immersive, deeper interaction with the product.
  4. Blockchain and non-fungible tokens (NFT) are opening up new ways to verify and distribute advertising content, which could lead to more transparent and secure advertising platforms.

Technologies such as AI, AR and blockchain have the potential to redefine the dynamics of advertising by emphasizing user-centricity and interactivity in the digital sphere. And if Bright’s Andy Baker is to be believed, all advertising players will end up with a more integrated, personalized and secure advertising ecosystem.

To summarize, we would like to say that advertising market players do not have to choose between Waterfall and Header Bidding, rather they have to keep up with the evolution of these technologies. Possible objections such as latency and complexity of integration are finding their solutions, such as 5G and Programmatic Direct. Experts, including those from SmartyAds, believe that both mainstream and alternative methods of monetising websites are already revolutionizing the field of digital advertising. It’s like going from good old-fashioned maps to GPS in a car — you still want to get to your destination, but now you have better tools to do so. To stay and play, you need to adapt to the changes.

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