Revenue experts estimate that mobile apps will generate a revenue of $935.2 billion by 2023. And, even though a recent study found that mobile users spent 88% of their time on apps, only 10% of app publishers monetize their traffic with advertising. What does that tell us? Apps have tremendous revenue potential. But how does an app publisher harness that potential to grow ad revenue?
In-app bidding is one such opportunity, and that's what we will be getting into today. We'll discuss what in-app header bidding is, how it works, its benefits, and everything else you need to know. So let's get into it.
What Is In-App Header Bidding?
In-app header bidding is a form of programmatic advertising technology built into an app's software development toolkit (SDK) to monetize its traffic. The in-app header bidding technology is based on the same principles as regular web header bidding, sometimes referred to as pre-bidding, advanced bidding, or pre-bid. The technology assures a real-time unified auction where the publisher offers their ad inventory to many demand partners, like Google, simultaneously. The auction creates competition between bidders for every in-app ad impression and ultimately selects the highest bid to maximize revenue for the publisher.
In-app header bidding is growing in popularity and quickly becoming the industry standard for displaying programmatic ads on mobile apps. However, it wasn't always the preferred way of doing things. Five years ago, the waterfall method was much more popular.
What is the Waterfall Model?
In the traditional in-app advertising waterfall method, publishers would rely on historical performance data from demand sources to prioritize which of them gets the impression. They allocated their inventory from source to source, cascading down the waterfall until all addressable impressions were fulfilled. However, the problem with this approach is that only one ad network at a time is ever given the opportunity to buy the available ad impression, making the process less competitive.
Publishers often experience a lower yield with the waterfall technique because the main partners bid on ad impressions in a sequence instead of in real-time. So, if a specific ad network is ranked first, it's given preference over other ad networks, meaning it has first dibs on responding to a request. This hinders the opportunity to maximize revenue because it prevents higher-paying advertisers from bidding more. In addition, if a specific ad falls further down the chain, it doesn't get called, and potential revenue is lost.
In-App Header Bidding vs. Web Header Bidding
In-app header bidding was born from a desire for a more fair, transparent, and efficient way of offering and buying ad inventory. In contrast to waterfall's sequential method, in-app header bidding allows all buyers to bid on the same inventory simultaneously, and the highest bidder always wins.
To understand the in-app process, it’s important to recap how header bidding works on websites since the process is much the same for in-app header bidding.
For websites, header bidding technology sits on top of a header bidding wrapper, which is a JavaScript tag responsible for:
- Making ad calls to demand partners
- Evaluating bids
- Communicating with the ad server.
But how does the header bidding wrapper work? Firstly, publishers need to paste the header bidding code into the page's header. Then, as soon as the user visits the site, that wrapper makes an ad call to all the demand partners. Now it's time for demand partners to submit their bids. There is usually a timeframe or timeout in which bidders must respond to prevent page latency. Then the wrapper sends the bids to the publisher's ad server, for example, Google Ad Manager. And finally, the highest bidder wins the real-time auction, and their ad gets displayed on the publisher's page. Make sure to check out our detailed header bidding guide for more information on how the web process works.
How Does In-App Header Bidding Work?
While the process for apps is very similar to web header bidding (a unified auction happens for every impression, and the highest bid wins), the main difference comes in the mechanics. Essentially, instead of having an embedded piece of code in the header of a web page, you instead use a software development kit (SDK) to start the process.
In an attempt to shed the connection with web-based header bidding, in-app header bidding is now going by different names, including unified auctions, parallel bidding, and advanced bidding.
What Is The Difference Between Header Bidding And Unified Auctions?
Unified auctions represent a trading mechanism built from the ground up for mobile app environments. While both auction models aim to maximize demand for inventory, their functions are distinctively different. But what does this mean in practice? It means that, in contrast to a traditional header bidding wrapper, unified auctions are handled on the server-side rather than the client-side, leading to faster load times. Google Exchange Bidding (now Open Bidding) is one example of a unified auction running on Google AdX.
A unified auction ensures only one bidding session takes place per impression. In contrast, header bidding selects a bid from multiple auctions (DSP and network-level) before sending it to the header bidding wrapper.
Furthermore, a unified auction environment combines all types of demand sources to simultaneously compete for every ad impression. This includes server-side programmatic demand sources and client-side (SDK-based) mobile ad networks.
Since all demand sources can bid in real-time in a unified auction, app publishers can determine how much each demand source will pay per impression for their inventory.
What Are The Benefits Of A Unified Auction?
Unified auctions offer several advantages over traditional waterfall bidding and client-side only header bidding.
Increased Reporting And Transparency
The improved ad monetization conditions created by unified auctions, where all types of demand—including server-side and client-side—can compete simultaneously and place a bid for each impression in the ad response, increases yield for publishers. And as another result of the improved approach, app publishers benefit from increased reporting transparency. With access to the auction performance data, including bid CPM prices, winning CPM prices, impressions, and earnings per demand partner, publishers can see which demand partners won and why—thus being able to set more accurate price floors.
Increased Demand And Revenue Maximization
No longer does a particular type of demand source get an advantage over another. All server- and client-side demand sources in a unified auction are treated as equal. This includes client-side mobile ad networks with real-time bidding capabilities, server-side DSPs, direct-sold buyers, and client-side mobile ad networks that have yet to transition to real-time bidding. This increased competition among the demand partners results in higher bids which leads to more revenue for the app publisher.
Improved efficiency
Ad ops teams can collect and analyze accurate bid request data in a unified auction environment, no longer relying on historical ad performance data as they did with the waterfall approach. With this vital data at their fingertips, ad monetization teams can better group, price, and sell their ad inventory. Get in touch with our team of ad ops specialists to learn more about how to improve the ad setup for your app.
How to Set up In-App Header Bidding
Several components and steps are involved in creating a functioning in-app header bidding setup for your app:
- A mobile app built for iOS or Android that is released in the app store
- Setting up the Prebid server
- Setting up your primary ad server
- Integrating Prebid SDK
- Integrating your Primary Ad Server SDK
While understanding how these components work together might be easy for some, the technical setup is challenging if you do not have any prior ad tech experience, the technical knowledge, or even access to all necessary platforms. Considering app publishers' difficulty in setting up their in-app header bidding solution, only about 10% of mobile apps properly monetize their ad inventory.
That being said, ad tech providers like Snigel offer solutions and the expertise to help you easily set up and optimize your in-app header bidding ad inventory. If you are interested in running ads on your app, get in touch with our ad ops experts.
What Are The Benefits of In-App Header Bidding?
In-app bidding has created a buzz in the industry, and with good reason. In-app header bidding offers scores of advantages for both publishers and advertisers:
- Boosted Earnings
- More Buyers Lead to Higher-Bid Matches
- Increased Fill Rates
- Flattening the Waterfall
- Improved Transparency and Maximized CPM
- Increased Chance of Remarketing Cookie Matches
- Reducing Manual Labor
- Higher Quality Ads
- Improved User Experience
#1 Boosted Earnings
The top realized benefit of in-app header bidding is maximized ad revenue. Put simply, in-app bidding enables web and app publishers to offer their ad inventory to more advertisers, and these advertisers will pay higher prices to reach their target audience. We'll dive more into how exactly this works in the other benefits on this list.
#2 More Buyers Lead to Higher-Bid Matches
Buyers will pay more to target users who fit their ideal customer personas. Having more buyers in the systems increases the chance of matching buyers and users to secure those higher bids. Essentially, in-app bidding increases bid density by exposing a more significant proportion of impressions to a buyer. This then results in a greater competition that drives up total revenue.
#3 Increased Fill Rates
Exposure to multiple demand partners allows publishers to increase their chances of getting a bid on every impression opportunity.
#4 Flattening the Waterfall
The waterfall method relies on historical data to determine the order of network calls, which is less than ideal. It means that once a network secures the top spot, it has little incentive to bid competitively. By contrast, in-app header bidding relies on real-time data, making for a fairer system that also allows media buyers to access more premium inventory.
#5 Improved Transparency and Maximized CPM
In-app header bidding enables improved transparency because all bids are visible, and everyone can see which bids are winning. It opens up inventory that wasn't previously accessible with the waterfall method. Essentially, you can see all available inventory for the publisher rather than just what is sent through the waterfall.
In addition, publishers can see exactly how much advertisers are willing to pay for each impression in the mobile app before placing their ad. This then allows publishers to calculate how much each impression is worth and bid to several advertisers simultaneously. When the highest-bidding demand source wins, they also enjoy the benefit of maximizing CPM.
Lastly, publishers get a clearer picture of what ads fall in front of their users.
#6 Increased Chance of Remarketing Cookie Matches
Cookie matches allow ads to be directed at very narrow audiences, thereby guaranteeing minimal wastage in ad campaigns. And minimal wastage leads to higher CPMs for publishers. In-app header bidding allows for more cookies to be matched. When you introduce additional and diverse demand partners, you increase the chances of valuable cookies being matched to any given ad request. They can also remarket cookie matches to achieve some of the highest paying CPM rates possible.
#7 Reducing Manual Labor
With the waterfall method, publishers often optimize their waterfalls periodically by running reports, analyzing results, and tweaking demand sources. While this process can lead to more success in the future, it's incredibly time-consuming and inefficient compared to in-app header bidding.
#8 Higher Quality Ads
Advertisers bid higher to get their ads in front of specific publishers' audiences. This increases competition and encourages all advertisers to make sure their ads count, thereby driving up the quality and relevance of ads.
#9 Improved User Experience
Running parallel auctions server-side reduces latency issues and therefore leads to faster loading times compared with the waterfall method. Faster load times and higher quality ads improve the user experience and reduce the chance of turning users away from your app.
Wrapping Up
In-app header bidding, or the more newly coined unified auctions, offers numerous benefits to both publishers and advertisers and will continue to play a dominant role in the industry. While it is undoubtedly necessary to implement in-app header bidding to maximize your mobile app revenue, it's even more complicated to set up than web header bidding. If you have the required knowledge and time, you can implement it yourself; however, it is time-consuming and complex work that leaves little time for the most important goal: creating the best content for your audience.
Snigel's dedicated developers and ad ops experts have created an in-app header bidding solution to solve this problem. As a Snigel publishing partner, you can focus on your app while your designated account manager optimizes your in-app header bidding setup for maximum performance and revenue. Contact us today to learn more about how we can help.
In-App Header Bidding FAQ
By reading this far, you should have a robust understanding of what in-app header bidding is and how it works. However, you may still have some questions floating to the surface. Therefore, this section rounds off our guide by answering some essential quick-fire questions about in-app header bidding.
Are there any drawbacks to in-app header bidding?
Yes, albeit a relatively minor one. The main drawback is implementing the technology since adding any technology increases complexity. However, with the proper support, implementation can be smooth and straightforward.
Do faster load times increase revenue?
Yes. We touched on how faster load times improve the user experience in the last section, but they actually increase revenue too. When you reduce latency, you increase the impressions per Daily Active Users (DAU) - a significant revenue driver.
How do you drive up the competition?
The goal of in-app header bidding is to drive up competition, and the more demand sources you integrate, the higher the competition will be between the sources.
Do publishers and advertisers benefit equally from in-app header bidding?
Yes. While many believe that in-app heading bidding mainly benefits publishers, greater visibility into the auction process is a win-win for everyone.
Ira is Snigel's Head Of Marketing. She supports our team and publishers by creating awesome guides on the latest adtech trends. Ira's background is in software development, communications, and media.
