Header bidding -- also known as "header auctions," "re-bid auction," "pre-bidding" and "advanced bidding" -- is designed to increase competition by providing a level playing field that gives advertisers equal access to publisher inventory.
However, due to lack of transparency and synchronization between ad tech players, header bidding can have the opposite effect.
The buzz about header bidding
Header bidding was born in a world in which Google controlled the eco-system. DoubleClick for Publishers (DFP), owned by Google, promised to serve the ad to the best bid. Ultimately, DoubleClick Ad Exchange (AdX) -- also owned by Google -- had top pick of a publisher's inventory. But AdX wasn't transparent as to whether publishers were getting the best price.
Designed to let multiple sources of demand bid on the same inventory at the same time, header bidding supposedly gets publishers higher bids for their inventory, and some publishers have reported a 20% to 50% lift in yield. While it is unclear if header bidding led to higher bids, one thing is for sure: It led to more control and transparency for the publisher, which is the advantage header bidding was intended to provide.
But the solution created another set of problems. Heading bidder slowed down publishers' page load times, and limited the number of buyers that can compete at once, because each tag became a potential source of added page latency. Heavy web pages already bogged down with third-party ad tags forced alienated readers to go elsewhere or, in some cases, install ad blockers.
Enter server-side header bidding
How can we slim down web pages? Why, we should move the auction to the server! With server-side header bidding, also known as S2S header bidding, the auction no longer takes place on the publisher's page. All bids are submitted to a server, which returns the highest winning bid to the ad server, avoiding latency. Business Insider, Purch, Trinity Mirror, The Guardian, Mashable and others have already moved to server-side header bidding, and many ad tech players have recently launched an S2S header bidding solution.
But server-side header bidding has its own downside.
The process is very similar to the traditional role of supply-side platforms and exchanges, which conduct a real-time auction on their servers and deliver publishers the winning bid. However, while exchanges traditionally connect directly with demand-side platforms, server-side header bidding exchanges are connecting to each other. Instead of the publisher getting "closer to the wallet" (i.e. the advertiser) they have moved further away. Feels a bit like a step backwards, doesn't it?
The future of header bidding
Can publishers trust one partner to mediate auctions across multiple bidders?
The only way this vision can be realized is through transparent, log-level reporting of bid-stream data maintained across all bidding partners. In order to achieve this, standards boards will need to get their foot in the door. Throughout the industry, header bidding standards are beginning to emerge. The IAB Tech Lab mulled guidelines around the systems called header bidding wrappers, which are partly designed to avoid the page-load slowdown, though it hasn't announced anything yet.
One thing is for sure: Header bidding, with all its different names and forms, doesn't fully solve the underlying problem. The industry is crying out for a truly open and unified auction. This is the only way that publishers can maintain direct control and increase revenue opportunities. Perhaps if we focus on discussing the underlying issues and finding solutions for them, instead of focusing on the buzzword, we can get closer to offering a true solution that would actually add value to publishers.