Why a Fresh Take on Header Bidding Marks the Way Forward in 2019

Header bidding has provided a new opportunity for publishers, to take control over their programmatic advertising. While for brands and agencies, it promised to make a new whole range of quality inventory options available via real-time bidding.

For every extra lane, we add to the RTB motorway, it seems there’s an accompanying pile up somewhere further down the road. So it proves with header bidding, where leaping traffic and bid request volume has turned into a bottleneck risk to be constantly monitored. For publishers, what that means a heavy barrier between the promise of the tech, and the reality: you might well want to add every SSP under the sun to your wrapper – but to do so right now could have a far greater negative impact further down the road – one that overshadows any short-term upside on yield. Latency and the effect on mobile data usage on client-side integrations, and cost on server-side header bidding are just a few such factors to consider.

In short, as the never-ending publisher search for ROI rolls on, our evolution is still far from complete.

Enter SPO

As we know all too well by now, ad tech loves an acronym. Header bidding’s firehose volume problem already has its own in the form of SPO, or supply path optimisation. Whether it’s supply, or indeed demand path optimisation we’re talking about, the approach is ultimately short-sighted. As we’ve seen time and again, tactics that favour one side of the auction over another are doomed to fail. For instance, in the case of bid caching, they may even prove detrimental to trust and the reputation of the sector as a whole. While solutions that benefit everyone may be harder to execute, that doesn’t mean they don’t exist.

Of course, at the birth of the whole header bidding phenomenon, it’s understandable there were rough edges to the tech. In time, we saw those smoothed out, not least with the launch of Prebid, which added open source, transparent standards for the first time. It also brought a welcome increase in control and sophistication for publishers optimising their yield. In short, all great progress. However, there are still more fundamental challenges around header bidding, that we must address for it to keep on growing the market.

 Of course, header bidding was a big advance over its predecessor, the waterfall. As it turns out, allowing all revenue sources to compete on price is just the first chapter in this story. In actual fact, with the wealth of real-time data now available in the wrapper, many current header bidding integrations are starting to look like pulling out a rusty penknife at a gunfight.  

Header Bidding 2.0?

The next stage in our development is not just about looking indiscriminately at price, on a bid by bid basis. Instead, we need to apply a far deeper level of understanding to that process. Especially considering the crippling technical cost, duplication, and inaccuracy that currently afflict both sellers and buyers in this process. Long story short: it’s time to move towards header bidding 2.0.

 What might that look like? Consider a machine learning-driven approach that takes into account the user’s value relative to each specific buyer’s campaign. This approach would result in something far closer to true market value for the publisher because it weighs the relative worth of the user, both within and outside of that specific auction. In addition to factoring in variables for auction type or whether a DFP bid comes from outside of the main header bidding auction, the list of possible variables that determine the true value of the user is long – and is growing all of the time. Ultimately, we’re talking about finding multiple ways of becoming smarter with the data available in our own bid streams – being more selective in order to optimise the entire programmatic process.

From SPO and DPO to EPO

For all these reasons and more, header bidding needs to move on from considering just a handful of dimensions such as country, ad type, size, device etc – towards true optimisation, based on multiple, real-time factors. That means user-level floor prices, and optimisation based around specific campaign goals and KPIs. Most of the current crop of header bidding integrations don’t account for the true user value to the buyer from the publisher end. Unless you understand whether a bidder is operating in a hyper-local, retargeting or contextual campaign, you can’t maximise value for either publisher or brand.

What we’re talking about involves building an understanding of both the supply and demand paths, and mapping one to the other – if you like, it’s EPO or entire path optimisation. By optimising yield for the seller and the buyer simultaneously, this creates a true virtuous circle. Truly an opportunity to be grasped in 2019.

How SSPs and Publishers Can Break the Walled Gardens

An enormous gap divides our industry. On one side are the likes of Google and Facebook, the so-called walled gardens. On the other side is everyone else. For publishers, Facebook Instant Articles is a poisoned chalice. It forces them to surrender their audience data and compete with Facebook for traffic. Meanwhile, Instant Articles lines the pockets of the social media giant and helps it develop even greater targeting abilities.

The walled gardens derive their power from their goldmines of data. They use the data as they see fit, giving advertisers access to a mere fraction of its potential. Unlike traditional publishers who think in terms of ad units, Facebook calculates everything based on audience. This shift to audience-based advertising has left many publishers behind. No longer can they forecast, set prices, or build successful business models. No longer are they selling what advertisers want to buy. This must change.

Fragmentation Is A Problem

The market has failed to keep the needs of publishers and advertisers in sync because our industry is so fragmented. The lack of cohesion has allowed the dominant players to amass an unfair advantage. Google and Facebook have an intimidating head start in the ad-tech market. But it’s not too late for data-driven publishers to win back their independence.

SSPs have a full set of ammo at their disposal — monetization, transparency, and data control.

To boost advertising revenues and push back against the Facebook-Google duopoly, publishers have resorted to building media alliances. But this is not a long-term solution. Publishers need to compete with each other. They must focus on building and selling high-quality audiences. They need enough raw inventory to keep themselves afloat in hard times.

Yield optimization based on ad placements is on its way out. By switching to audience-based optimization, the sell side can command higher fill rates and eCPMS, while advertisers can get more value from every dollar they spend programmatically. The consumer, meanwhile, enjoys a more relevant and personalized experience.

Paradigm Shift Needed

Our industry needs a paradigm shift. Advertisers are spending their money more intelligently than ever. They know what they want and exactly how much they’re willing to pay for it. They want audiences, and that’s what Facebook and Google give them. Yet most players in the ecosystem are not selling this way. Instead, they offer distractions: placements, formats, devices. Advertisers don’t want these things. And they certainly won’t pay top dollar for them.