Header Bidding Explained: How To, How Much and Why?

From ad blockers and harsh competition to ad fraud and data discrepancies – it seems like publishers just can’t catch a break. But “One must imagine Sisyphus happy,” and in our case, instead of embracing absurdism, pubs can find salvation with header bidding.

Or they can’t? The flare of novelty behind the technology has vanished, and now we can clearly look at all of the good, the bad, and the ugly related to the tech. What exactly is it, and how does this solution fit in the ad tech ecosystem? How does it work? How expensive is it? Let’s find out!

What Is Header Bidding in Advertising?

Header bidding is a technology that allows publishers to offer ad inventory to their programmatic ecosystem before selling it directly.

Basically, this solution let publishers introduce their ad placements to ad exchanges, ad networks, and SSPs and then call the ad server to do the same for their direct partners. Once everyone gets their chance to bid, the auction starts.

The point is to get offers for their ad inventory from multiple demand sources and, as a result, get the best prices possible.

Like everything in ad tech, header bidding has many edges to it. There are dozens of ways to implement it, resulting in upsides, downsides, and tech nuance. So, to not get you confused with the baggage of complex info, we’ll answer questions one by one.

When Did Header Bidding Start?

The first written mention of the term can be traced back to 2014. Back then, it wasn’t universally called “header bidding.” The lame names included “tagless integration,” “parallel auction” (sometimes used even now), and “holistic yield management” (thank God that didn’t stick).

In 2015, AdExchange popularized both the concept and the name in “The Rise Of Header Bidding.” Wikipedia and Forbes even regard this event as the new era of programmatic advertising. It sounds a bit pretentious if you ask us, but we’re always down with cool wordings.

As for the inventor, there is no general consensus. The tech came under many masks in the early years, so it’s difficult to find its one true father. Some credit OpenX, but there’s not much proof.

Why Did Header Bidding Start?

The opinions on the reasons behind the technology’s birth differ. Some think that this was simply inevitable. In their view, programmatic has always been about making media buying more transparent, quick, and efficient. Header bidding represents all of the above, so its appearance was natural.

Others find a more practical reason. You see, Google’s Doubleclick for Publishers (DFO) has always been the most popular solution for said publishers. The comfort of a walled garden solution comes at a price. Specifically, Google’s ad server favored Google’s ad exchange, limiting external ad offers and lowering publishers’ profits.

Both opinions are valid in their own rights. What they do have in common is that header bidding solutions came to replace waterfalling, so let’s talk about that.

What Is the Difference between Header Bidding and Waterfalling?

Waterfalling is selling according to a set hierarchy of ad sales requests. Simply put, the publisher sequentially offers the inventory to different demand sources (ad networks, supply-side platforms) in a predetermined order until this inventory is sold.

The order defines everything. If the highest bidder is set lower in the hierarchy, they won’t get a chance to bid.

Compare that to header bidding, where the platform’s inventory is offered to everybody within the ecosystem AT ONCE, and there’s no need to be a genius to see why it’s preferable over waterfalling.

What Is Header Bidding vs First Price Auction?

Before we move on to the tech stuff, it’s important to answer another question. No, first and second-price auctions aren’t the same as waterfalling, nor are they the same as header bidding.

The first price auctions are the auction mechanisms that determine the winning bid and payment amount in programmatic advertising. All bids are taken simultaneously. First/second price auctions can be easily implemented with the header bidding solutions. Speaking of which…

How to Set Up Header Bidding?

At its core, the whole process works thanks to a prebid adapter based on an open-source (free!!!) Javascript library.

We’re simplifying things a bit, but that’s how you basically use it as a service:

Step # 1
Your vendor company that positions itself as an SSP or ad exchange (Google Ad Manager, Index Exchange, etc.) provides you with a JS code. This code is a wrapper (framework, container) that you put in the <head> section of your website.

Step # 2
Check to see if your ad tech demand partners (ad exchanges, DSPs connected to your SSPs, or ad networks) support the prebid adapter. It’s easy to do: go here.

Step # 3
When all of the conditions are met, your demand partners will be able to place their bids on your inventory.

As you can see, the basic setup doesn’t require much. Mostly, header bidding comes down to the provider support.

In truth, when we dig deeper, things get very diverse.

What Are the Three Types of Header Bidding?

There are three types of header bidding wrappers:

• Client-side

The client-side implementation means the whole process happens using the browser. It sends requests in parallel with how the page loads. The partners place bets, and after that, the software detects the winner and transmits information to the publisher’s ad server.

The whole “load” of accepting requests and determining the winner lies on the shoulders of the browser. This makes client-side header bidding easy and cheap to implement, but the number of requests obviously increases page load time.

• Server-side

In simple words, instead of leaving everything to the browser, a separate server is now responsible for solving ad requests and defining the winning bid. Server-side header bidding is a serious approach. Usually, it comes as a service from a provider with its own set of analytics & reporting tools.

Naturally, server-side header bidding is more versatile and has a lot of potential, but the setup is more expensive. We’ll talk about that in a moment.

• Hybrid

This rare setup combines both of the options above. In theory, it should redistribute the load between the browser and server to both optimize costs and server performance. This solution combines the benefits of transparency behind client-side implementation and low latency behind server-side header bidding.

As a trade-off, the monitoring and implementation of hybrid header bidding is a real pain for publishers and their providers.

How Does a Header Bidding Auction Work?

All this theory is cool for history books and our SEO rankings, but we do understand that proper examples are needed. So, since you now know the basics, let’s look at the example of a client-side HB auction.

Step # 1. Header Bidding Auction

The header bidding wrapper (like Prebid.js) sends out requests to multiple SSPs and ad exchanges simultaneously. Each SSP and ad exchange responds with their highest bid for the impression.

Step # 2. Sending Bids to Ad Server

The header bidding wrapper collects all the bids and typically selects the highest bid to send to the publisher’s ad server. Sometimes, multiple bids can be sent to the ad server to compete further.

The highest bid (or bids) is usually passed to the ad server using key-value pairs. This involves setting a key (e.g., hb_pb for header bidding price bucket) with the bid value.

Step # 3. Ad Server Auction

You might be wondering, how the hell does the RTB programmatic auction happen in this case? Well, it’s a bit trickier than that.

When the ad server receives the bids from header bidding, the platform includes them in its own unified auction. This auction includes:

• Direct Sales;
• Programmatic Deals;
• Ad Network and Exchange Bids.

Step # 4. Final Decision Logic

The ad server evaluates all bids, including direct deals, programmatic deals, and bids from the auction. Then, the platform uses prioritization rules to determine which ad to serve. These rules are typically set by the publisher and can include:

• Price Priority: The highest bid price generally wins;
• Line Item Priority: Direct deals and guaranteed campaigns may have higher priority regardless of price;
• Floor Prices: Minimum price thresholds that bids must meet to be considered;

Step # 5. Ad Delivery

The ad server selects the highest priority bid (considering both price and any other rules) as the winning bid. The ad associated with the winning bid is served to the user. Awesome, the wrapper has done its job!

Now, let’s do it again, but shorter and with numbers.

Step # 1

• SSP A receives a bid of $2.50;
• SSP B receives a bid of $3.00;
• SSP C receives a bid of $2.75;

Step # 2. The ad server receives the highest bid from header bidding (e.g., $3.00 from SSP B). The platform compares this bid against direct deals and other programmatic bids. The direct deal has a CPM of $2.80.

Step # 3. The ad server runs the final auction, considering all bids.

Step # 4. If no direct deals have higher priority or price, the $3.00 bid from SSP B wins. If a direct deal or guaranteed campaign has higher priority, it might win even with a slightly lower bid (e.g., a $2.80 direct deal could win if it has higher priority).

Step # 5. The ad placement is delivered!

What Is Header Bidding Pricing?

“That seems quite cool, but how much do I pay for it?”

Well, there is no definitive answer to this question. Implementing header bidding solutions involves a lot of variables that could change the price status from “free” to “several thousand dollars a month.” These include:

• Tech fees

Wrappers and libraries are free. However, managed solutions services are not; the providers charge revenue percentages.

• Development & Maintenance

The in-house advertising team will cost an established hourly rate. Outsourcing isn’t cheap either. Of course, you can do everything by yourself and we’ll discuss how a bit later.

• Analytics & Support

If you want a finite header bidding product worth investing in, you’ll require analytics and reporting tools. Moreover, you’ll have to opt for a server-side implementation.

As a result, the final solution usually varies from a few thousand dollars for small-scale implementations using open source to tens of thousands of dollars if you’re a large publisher.

How to Set up Header Bidding for Free?

But wait, there is light at the end of the tunnel. If you’re ready to sacrifice a *few small things*, you can implement header bidding for free. The setup implies:

• Open-source wrappers;
• No customization;
• Ready SSP support (SSP isn’t free, but let’s ignore that);
• No additional analytics;
• Self-maintenance.

Here’s how to get started with Prebid.js – the living heart of the whole thing:

1. Download Prebid.js

Go to the Prebid.js website and download the library with only the adapters you need for your SSPs. Ask your SSP provider which ones you need if you’re unsure.

2. Add Prebid.js to your website

Include the Prebid.js library in your website's header. This step goes for every setup.

3. Configure adapters

Create a configuration file that defines your ad units, bidders, and the parameters required by each bidder. This configuration is typically a JavaScript file that sets up the Prebid.js auction.

4. Integrate with the ad server

Modify your ad server setup to use header bidding. This usually involves setting up key-value pairs in the ad server to read the bids provided by Prebid.js.

5. Test

Test, test, and test again! You want your ads to be shown correctly.

The “broke setup” is a good way to learn new things and test if the tech is worth further investment.

Do You Need Header Bidding?

Okay, now that you know about the lore, price, and implementation, we can finally discuss whether you should implement it yourself, choose the providers, or simply ignore it.

What Are the Benefits of Header Bidding?

No matter the publishing vertical, the benefits will include:

• Diversified demand

Stable revenue, better ad fill rates, improved user experience, maximized yield, and more user data – a wide range of demand sources gives publishers a loooot of small advantages.

• Transparency

The tyranny of walled garden providers is over! Just kidding. However, header bidding is still a huge step in the right direction, where the publisher has actual control over ad inventory deals.

• Increased revenue

The most important benefit of header bidding is, of course, money. Some publishing companies even claim that just + 1 additional demand source = + 10 % to sales efficiency.

What Are the Disadvantages of Header Bidding?

Okay, now to the nasty stuff:

• Tech complexity

As you can see from the huge heading above, setting up header bidding is not easy. Even if you use our free setup, you’ll still need a decent chunk of time to learn how to maintain it.

• Pricing

Yup, usually header bidding isn’t free or cheap. We’ve already explained everything there is to discuss, so let’s move on.

• Increased latency

The increased page load time is a great issue with client-side setup. With server-side implementations, things are much better, but it’s still an issue since bid requests from various servers have delays.

Is Header Bidding Good?

Don’t ask us, ask statistics. According to a Header Bidding survey, by 2022, 66% of publishers were already using the technology. According to Statista, this number reached 76% in 2019 (!!!), but the number of respondents is quite low.

Overall, the adoption rates are pretty high. The main barriers noted by providers are of course price and the complexity of implementation. But the benefits of transparency, higher CPMs and control are too sweet to resist.

What Is In-app Header Bidding?

What about mobile header bidding? There are no header sections on mobile apps, so how does it work? You see, like many things in ad tech, HB isn’t a strict implementation. It’s more of an idea about optimizing traffic in a certain way.

For example, Google Admob and Facebook offer “in-app header bidding,” but technically it isn’t. The main selling point, however, remains the same – to get more demand sources.

Epom ad server does the same thing. Although the platform does not do header bidding de jure, it does de facto. Specifically, Epom allows publishers to prioritize programmatic demand and lower direct demand while simultaneously receiving bids from both.

In fact, Epom’s setup is much simpler than everything we’ve described so far + plus there is a support team ready to answer all of your questions. Since the trial is free, why not check it out?