Real-Time Bidding vs Header Bidding: Everything You Need to Know

Real-time bidding (RTB) is the automated process of buying and selling ad inventory via live auctions.

Header bidding enables publishers to offer their ad inventory to multiple ad demand sources simultaneously.

In this guide, we go into more detail about what each of these are, pros/cons, and how they affect your revenue potential. Along the way, we also answer frequently asked questions such as:

• How are these terms different from programmatic advertising?
• Which option is best for publishers?
• How can publishers earn more revenue from ads?
• And more.

What is real-time bidding?

As mentioned above, real-time bidding (RTB) is a type of programmatic advertising where publishers sell ad inventory via live auctions in the milliseconds before a web page loads. These real-time auctions take place via an ad exchange.

Compared to one-on-one deals, real-time bidding allows publishers to earn more revenue because multiple advertisers are competing against each other to win the bid.

There are many different types of ad auctions that fall under RTB including private marketplaces (invite-only), open auctions (anyone can join). Header bidding, while related, is a separate process that enables multiple advertisers to bid simultaneously before the ad server request.

What is header bidding?

Header bidding allows publishers to send bid requests to multiple ad exchanges simultaneously before making a call to their ad server.

While RTB is more profitable for publishers than one-on-one deals, header bidding creates even more competition among advertisers, driving bids up even further and maximizing ad revenue.

Where does header bidding vs RTB fit into the ad monetization ecosystem?

Digital advertising space was originally bought and sold manually through direct deals, i.e., publishers and advertisers would negotiate terms and sign agreements via email, phone calls, etc. This was time-consuming and inefficient.

Programmatic advertising changed that by automating the process using ad technology. However, deals were still often made one-on-one, ahead of time, and in bulk (i.e., programmatic direct). This limited revenue potential because the publisher’s inventory would be locked into a deal even if a better one showed up. It also prevented the possibility of targeted ads because the advertisers weren’t able to know ahead of time who would be viewing the ad.

Real-time bidding fixed those limitations because ad space could be sold via ad auctions in the milliseconds between a user clicking on the link and the page loading. This meant that publishers and advertisers could learn something about who would be viewing the ad and more advertisers could bid against each other for the ad space.

However, in the early days of real-time bidding, online exchanges managed the bidding process using the waterfall method. With the waterfall method, the publisher sets a floor price and sends a bid request to one ad exchange at a time until one of them is able to return a bid equal to or higher than the floor price.

For example, say a publisher sets the floor price to $3. A user lands on their website, the auction process starts, and the highest bid from the first ad exchange bids $2.50. The $3 floor price isn't met, so the bid request goes to the second ad exchange. The highest bid from that ad exchange is $3.50, which is over the floor price and therefore a winning bid.

While this method ensured that the floor price was met, there are two main issues with this approach:

• Lower CPMs for publishers. In the example above, let’s say one of the ad exchanges further down the list would be able to return a higher bid (e.g, $4). The publisher would miss out on this additional revenue because ad exchanges further down the bidding sequence may not get a chance to bid on the ad inventory if it's sold before reaching them.

• Slow load times. The more demand sources publishers connect to, the longer the webpage takes to load because advertisers are bidding on their ad inventory one at a time.

This is where header bidding helps.

Instead of selling ad inventory in a waterfall-like sequence, header bidding sends out bid requests to multiple ad networks, ad exchanges, and SSPs (supply-side platforms) simultaneously. This gives all the demand sources (that are sent a bid request) equal opportunity to bid, which creates more competition and drives up the price.

Additionally, since all bid requests are sent at the same time, the process is much faster.

How to Implement Header Bidding (and Earn More Revenue)

There are two main ways to implement header bidding:

• Using an open-source platform and doing it yourself

• Working with a header bidding partner

Below, we cover these two options in more detail and use Snigel as an example of working with a header bidding partner.

Use an Open-Source Header Bidding Platform

This is a great option for large publishers with large budgets.

Many publishers underestimate the time and resources it takes to set up and manage header bidding using an open-source platform such as Prebid.js.

In addition to the programming knowledge required to paste the header bidding wrapper in your website pages, you also have to consider what additional ad tech you’ll need to maximize revenue and answer question such as:

• How can you optimize ad placements?

• How can you boost ad revenue while minimally affecting the user experience?

• What user data should you share with advertisers to help them run more targeted ads and bid more for premium inventory?

• How can you show two smaller ads instead of one large ad if it means more ad revenue?

• Should you use prebid or post-bid?

• What ad server and ad manager should you use?

• How do you increase fill rates?

• Should you use client-side or server-side bidding?

• What auction model should you use?

Furthermore, gaining access to top ad exchanges like Google AdX may not be possible, as they are often invite-only and typically require a high volume of monthly views.

For these reasons, many small to medium-sized advertisers opt for Snigel’s header bidding solution.

Work with a Header Bidding Partner: Snigel

This is a great option for small to medium-sized publishers.

Snigel makes the setup and management of your header bidding much easier. Instead of inserting the header bidding wrapper yourself or hiring a programmer, we handle everything for you — from the initial setup to ongoing testing and maintenance.

Plus, our dedicated ad ops experts create, implement, and maintain a custom ad strategy designed to help you squeeze every dollar out of every ad impression.

Snigel connects publishers to multiple demand sources, including top ad exchanges, SSPs, and ad networks such as Google AdX, AppNexus, and many more. Some of these demand partners offer private marketplaces you may not have access to on your own.

In addition, Snigel comes with advanced, AI-powered ad tech:

• AI bidder optimization, to switch bidders between client- and server-side header bidding based on where they perform best. AI bidder optimization can increase ad revenue by over 7%.

• Adblock recovery, so you can earn revenue even when users have an ad blocker. Our tech automatically switches from standard ads to adblock-compliant ads based on the users settings. Adblock recovery can increase ad revenue by over 10%.

• Dynamic floor pricing, which automatically adjusts the floor price to combat bid shading, increase CPMs, and prevent unfilled ad space. Dynamic floor pricing can increase ad revenue by over 5%.

• Smart refresh, which uses multiple time- or action-based triggers to display multiple ads in a single ad unit (rather than just a single ad for the entire time a user is on-page). Smart refresh can increase ad revenue by over 6%.

• Adaptive ads, which let you fill ad space with whichever number and size of ads returns the highest revenue. For example, if two smaller ads sell for $0.55 each, whereas one larger ad sells for $1, the two smaller ads would win the bid. This tech can increase your ad revenue by 10–30%.

• Super adhesive ads, which let you show large ads in a smaller ad space, as the visible portion of the ad moves down with the user’s scrolling. Super adhesive ads can increase ad revenue by over 20%.

• Interactive ad units, which engage the user and increase the amount of time they spend viewing the ad, by inviting the user to click through, play a game, or vote in a poll. Interactive ad units can increase ad revenue by over 35%.

• AdStream, which enables you to display high-quality video ads on your website, to achieve higher CPMs. AdStream can increase ad revenue by 23%.

All of this ad tech combined with the customized approach we take for each of our publishers is why they see an increase of 57%, on average, when switching to Snigel.

Get in touch with our customer success team to see how Snigel helps you boost ad revenue by 57%.