What is Header Bidding? A Comprehensive Guide for Publishers

What is Header Bidding? A Comprehensive Guide for Publishers


Header bidding enables publishers to offer their ad inventory to multiple ad demand sources simultaneously. This increases ad revenue because multiple ad auctions take place at once, meaning more advertisers are forced to bid against each other, which drives up the price.

While it’s helpful to understand what header bidding is, how it works, and the history behind it, it’s more important for publishers to understand how to implement it in order to maximize revenue. That’s why we’ll start with a brief overview of header bidding and then focus on your options for implementing it. Finally, we cover nearly a dozen frequently asked questions surrounding header bidding.

Snigel can help you easily connect to top SSPs, ad networks, and ad exchange platforms. Plus, you’ll have a dedicated ad management expert to create, implement, and manage an ad strategy that’s been customized to the exact needs of your website. To learn more, get in touch.

What is Header Bidding?

Header bidding is an alternative to the historical “waterfall” method and is sometimes referred to as advanced bidding, pre-bid, or pre-bidding.

Historically, publishers have used the waterfall process, where available ad inventory is sent to one demand source (i.e., supply-side platforms, ad exchanges, and ad networks) at a time. The demand source auctions off the ad inventory to the highest bidding advertiser. If the highest bid is above the price floor set by the publisher, the ad inventory is sold. If the highest bid is below the price floor, the ad inventory is sent to the next demand source in line until the inventory is sold.

There are three main issues with the waterfall method:

  1. Demand sources further down in the bidding process that may be willing to offer more money won’t get the opportunity if the inventory is sold before it gets to them. This means publishers are missing out on revenue.
  2. Top-ranked demand sources usually get the first opportunity at a bid. Unfortunately for publishers, the ranking system is often determined by the size of the network rather than the amount they are willing to pay for a bid, resulting in lower monetization potential for the publisher.
  3. The more demand sources you have to send the ad inventory to, the longer it takes for the ad to load on the page.

Header bidding solves these problems by creating an open auction where multiple demand sources can bid on the ad inventory at the same time. Thus, not only are multiple advertisers bidding against each other, but also multiple ad auctions are taking place at once. This produces more competition, which increases ad revenue.

Waterfall Auction vs Header Bidding illustration

“Header bidding gives publishers access to better integration with revenue partners and ad tech companies than the previous waterfall or daisy chain system. Header bidding can significantly increase ad revenue for publishers thanks to these improvements. The technology is continuing to evolve which is why we’re seeing record-high adoption numbers,” said Snigel’s Head of Ad Operations, Ela Fabjanczuk.

How Does Header Bidding Work?

First, publishers need to place a JavaScript tag in the website’s header. (This is how the name “header bidding” came about.) This tag, called a header bidding wrapper, is what allows the publisher to create an open auction and invite multiple demand partners to bid.

When a user lands on the website, an auction is initiated and ad requests are simultaneously sent to multiple advertising demand partners with details about the user, the webpage they have landed on, and the ad units on the page. From there, advertisers can decide in real time how much they are willing to bid based on the information in the ad request.

Once a winning bid is determined, the publisher’s ad server and the advertiser’s server work on the backend to display the ad creative to the user.

This entire process happens within milliseconds!

how does header bidding work

How Do You Implement Header Bidding?

To get started with header bidding, there are two main considerations:

  1. Setting up and managing a header bidding wrapper: This includes adding the code to your websites, choosing settings (such as how long advertisers have to place a bid), and much more.
  2. Creating and managing accounts with each demand source: Most demand sources have complex requirements for joining their network (more on this later), and many only let you join if they invite you.

You can do this yourself using an open-source platform or you can work with a header bidding partner who manages the wrapper and demand sources for you.

Before digging into those two options, it’s important to note that setting up the header bidding wrapper and connecting to demand sources is only the first step. To get the most out of it, there are many more factors to consider:

  • How will you ensure that your header bidding setup won’t increase page latency and negatively affect other aspects of the user experience?
  • In a given space, will one large ad or two small ads give you more revenue?
  • What type of ads will give you the most revenue?
  • Where should ads be placed to get the most revenue?
  • How will you display ads to users with ad blockers without incurring penalties?
  • What user information can you share with advertisers to encourage them to pay more for the ad space?
  • How will you manage user consent laws in different countries?
  • And many more.

Answering these questions and implementing the right solutions is where working with a header bidding partner can really make a difference in how much you're able to earn from ads. Choosing the right partner can increase ad revenue by 50+%.

Note: We give specific examples below of how Snigel can help optimize your ad setup for maximum revenue and a great user experience.

Using an Open-source Header Bidding Platform

When using an open-source header bidding platform, you’re responsible for all aspects of your header bidding technology and strategy. While this may sound obvious, many publishers underestimate how complex and time-intensive the task is. To get the most out of your header bidding in-house, you’ll need a team of full-time developers and a team of full-time ad op specialists.

Typically, only very large publishers have the resources to manage header bidding effectively on their own. Small publishers can implement header bidding, however, most end up losing out on a lot of revenue because they don’t have the resources to optimize their ad setup.

There are many open-source header bidding platforms to choose from (Prebid.js is the most popular), but all of them require advanced technical skills to implement and maintain.

Pros

  • It’s free. (If you have the development and ad ops skills required, open-source platforms can help you avoid sharing revenue with a third party.)
  • You have full control over your ad strategy.

Cons

  • You’ll need a large amount of resources to create an effective setup (e.g., ad ops team, development team, designated budget).
  • Your tech options for mitigating slow page load speed and other issues may be limited. (Many companies have spent years and huge amounts of resources developing software to help mitigate these issues. If you choose an open-source platform, you’ll have to develop these solutions yourself or pay for additional software.)
  • It may take longer to get paid because you have to aggregate multiple invoices and match them to the right dashboard and many SSPs have NET 60 or NET 90 payment terms. Whereas, most header bidding partners use NET 30 payment terms and are responsible for gathering payments from SSPs on your behalf.

Who should use open-source header bidding platforms: Large publishers with enough resources to hire developers and ad op specialists who focus solely on header bidding implementation.

Working with a Header Bidding Partner

There are many different header bidding partners to choose from, and each one will offer different ad tech and services.

Many header bidding partners will connect you to multiple demand partners and help you with the initial setup of whatever ad tech they provide. From there, you’ll have access to a self-serve platform where you can adjust some aspects of your ad strategy. If you have questions, you may or may not have access to a support line.

With this type of header bidding partner, you’ll still need some technical expertise in order to make the necessary adjustments. Plus, you’ll need an ad strategy specialist to help you know the right layout to use.

On the other hand, there are header bidding companies like Snigel (our header bidding solution) that take a full-service approach. With Snigel, you’ll be assigned an ad management expert who creates, implements, and manages a fully customized ad strategy for you. You won’t need your own developers or ad specialists.

Plus, Snigel comes with advanced, AI-powered ad technology:

  • AI bidder optimization, which is used for improving load speed and increasing fill rates by matching the best bidders with the ad space based on country, device, and browser. This can increase revenue by 7+%.
  • Adaptive ads, which is used for filling ad space with whatever size ad(s) will produce the most revenue each time a user views a page. This can increase revenue by 10-30%.
  • Super adhesive, which is used for displaying larger ads in smaller spaces. (Larger ads typically sell for a higher cost-per-mille.) This can increase revenue by 20+%.
  • Smart Refresh, which is used to display a new ad in the same ad spot if a user stays on a page long enough, scrolls down and then back up, switches pages and then returns, etc. This can increase revenue by 6+%.
  • Adblock recovery, which is used to switch between adblock compliant ads and higher paying ad types, depending on the users settings. This ensures you always get some revenue from every pageview and can increase revenue by 10+%.
  • AdStream, which is used to display high-quality, native video ads on your website. This can increase revenue by 23%.
  • And much more.

Snigel’s header bidding stack is lightning-fast and is connected to all major advertising platforms: Google AdX, OpenX, Amazon Publisher Services, Index Exchange, and more. This helps ensure your ad inventory is available to the highest bidders with the highest quality ads.

To learn more about the different types of header bidding partners and how to choose the right one for your website, read our guide on header bidding solutions.

Get in touch for a free assessment to see how Snigel can help you increase your ad revenue. 

Pros

  • Increased ad revenue: Even though there is a fee for working with a header bidding partner (typically a percentage of ad revenue earned), most publishers still see a net increase in ad revenue that wouldn’t have been possible without a header bidding partner. 
  • Access to ad op specialists: Creating and maintaining an effective ad strategy takes a lot of time and expertise that most publishers don’t have. A good ad ops specialist, like you’ll have with Snigel, will make sure your ad units are placed for maximum impressions without affecting the user experience, you’re connected to the highest bidders for your website, you’re protected from policy violations, and much more. All of this significantly impacts the amount of revenue you earn.
  • Access to a full team of developers: Developing, implementing, and maintaining a full ad tech stack is extremely time-consuming. A header bidding partner can relieve you of that burden.
  • Access to additional ad tech: While open-source header bidding platforms will offer a few basic tools for managing your ad inventory, you’ll need additional software to get the most out of header bidding. Header bidding partners give you immediate access to the technology they’ve been developing for years.

Cons

  • Fees: Most header bidding partners charge you between 10%-30% of the ad revenue they help you earn. Often, publishers who charge more than 10% are able to earn you more revenue overall. So, you'll want to consider both the revenue share and how much you're able to earn.  Publishers can join Snigel for a revenue share of 20% — there are no setup fees. Publishers are able to earn 57% more ad revenue on average when switching to Snigel. 
  • Lock-in clauses: Some header bidding partners make you sign an annual contract and will charge you large fees for breaking that contract. This is an issue if you find a different partner who can help you earn more revenue. With Snigel, there are no lock-in clauses. You can test Snigel out on just 5%-10% of your traffic and leave whenever you want — no strings attached.
  • Entry requirements: Nearly all header bidding partners require that you have original content without any bot traffic. Additionally, most have minimum traffic or revenue requirements. Snigel works with publishers making at least $50 per day (for more information on who we work with, view our FAQ page). 

Who should work with header bidding partners: Any publishers without the technical expertise or resources to manage a complex header bidding stack on their own.

What Should You Look for in a Header Bidding Company?

Here are the top factors to consider when looking for a header bidding company:

  • Do their products provide what you need? Some only offer header bidding, while others have additional functionalities like consent management, programmatic deals (case study here), the ability to serve ads without user consent, and video ads.
  • Does their business model work for you? Some businesses offer more of a plug-and-play solution, while others approach their clients with a full-service consultancy. Which do you prefer?
  • What are your priorities for your site? For example, one ad tech business might focus solely on revenue. Another may pay more attention to user experience and site speed. The latter is reflected by how well the company is equipped to help you achieve good Core Web Vital scores and fix First Contentful Paint (FCP), Cumulative Layout Shift (CLS), and First Input Delay (FID) issues.
  • What are their payment terms? This is a big one. What are your cash flow requirements? Most businesses pay net 90 days, while others pay as low as net 30 days.
  • How good is their service? Make sure they give you a good ad ops person to work on your site! This can make all the difference, as an experienced ad ops person will know where to place ad units, when to use video vs. interactive units, etc. They will also keep testing for improvements on your behalf and update your ad stack improvements, like 3rd party cookie alternatives.
  • Do their company values align with yours? Some focus on service, some on performance, and others on both.

Related: 9 of the Highest Paying Ad Networks: In-Depth Guide

Frequently Asked Questions

What Are the Pros and Cons of Header Bidding for Publishers?

Pros

  • Increased revenue. The most critical benefit to publishers is that they make more money than they would when using AdSense or the waterfall system. Using this AdSense revenue calculator tool, you can get an idea of how much your website could earn with header bidding. It’s not uncommon to see an increase in revenue between 30% and 70%, with some publishers seeing even more than that. You can read about a real-life example in this header bidding case study.
  • More control. Publishers can choose which demand partners to add to their header bidding auctions. This improves ad quality, as a publisher can handpick the best ad exchanges, SSPs, and ad networks for their website.
  • More competition. Advertisers have to pay more to outbid each other and win impressions. More buyers equals more competition and higher CPMs. As a result, website owners get more money for their ad inventory.
  • Easy to manage. If you’re working with a credible AdX partner or header bidding partner, you can plug and play without worrying about the administration of managing and updating your own solution.
  • Better visibility for advertisers. Buyers can see the publisher’s inventory available, meaning a better opportunity to win premium inventory compared to the old RTB waterfall auction.

Cons

  • Most publishers need help with implementation. The technology behind header bidding is complicated — there is no denying that. But many ad tech businesses like Snigel have devoted their time to perfecting and simplifying the technology so that publishers don’t have to.
  • Page load times. Core Web Vitals are a common concern for publishers looking to use header bidding but will vary depending on the solution a publisher uses. Header bidding solutions like Snigel’s AdEngine use asynchronous loading, so page load speed is not negatively affected.
  • It may take a few weeks to see an impact. Some publishers even find initial losses in revenue. However, a good header bidding company will optimize performance by adding more demand partners and creating a bespoke setup for the publisher.

When Did Header Bidding Start?

Header bidding was developed in 2014 as a solution to the shortcomings of the Real-Time Bidding (RTB) waterfall approach and as a way to combat Google’s competitive advantage in the market. To clarify, Google’s ad server favored its own exchange, which limited publishers’ revenue and exposure for advertisers. For the first year, the programmatic technique did not have the generic name “header bidding” as we know it today. It was called tagless, pre-bidding, full bidding, parallel auction, and many other words by various vendors.

In 2015, AdExchanger wrote an article on the rise of header bidding, and the term became widely accepted. Finding a common name made a massive difference in the industry as it was easier for publishers, advertisers, and vendors to communicate and implement a solution. As a result, header bidding adoption spread rapidly.

What is a Header Bidding Wrapper?

A header bidding wrapper is a short piece of JavaScript code placed in the header of a publisher’s website. It provides access to multiple advertising demand partners and rules for profitable Real-Time Bidding (RTB) ad auctions. The header bidding wrapper lets publishers flexibly add or remove an advertising demand source without altering the website’s code. In addition, the wrapper enforces timeout settings (the number of times bidders have to respond) and triggers the call for advertising demand partners to submit bids.

Without a header bidding wrapper, a publisher would have to manually replace the old header tag with a new one every time an update occurs. Furthermore, publishers would have to add and remove individual tags on the page for each demand partner. Overall, the header bidding wrapper provides an efficient structure for creating an ad auction.

What is the difference between Client Side Header Bidding vs. Server Side Header Bidding?

Server-Side Header Bidding vs Client-Side Header Bidding

The first header bidding systems created an auction within the user’s browser (Client Side) which requested bids from multiple advertising demand sources. However, latency increased as more SSPs and ad exchanges were added to the auction. Server side header bidding (S2S) was established to combat this latency.

Server-side header bidding allows the auction to occur outside of the user’s browser. This reduces the number of ad calls going to and from the web page. Instead, the auction is held after one call is made to an external server. Server-side header bidding results in faster page load times and lower processing power requirements, which improves the user experience.

What is Prebid.js?

Prebid.js is a popular open-source header bidding platform created by Xandr (formerly AppNexus) for the web that enables publishers to set up line items and manage multiple ad calls with an ad server. It includes demand sources and analytics adapters. It supports currency conversion, GDPR, common ID systems, and multiple ad servers.

Prebid is a sophisticated technology that is designed to be used by ad tech developers.

The Pros of Using Prebid.js

  • Prebid.js is open source and free to use. If you have the development and ad ops skills required, Prebid.js can help you avoid sharing revenue with a third party.
  • Resources and Community. While there is no official support, Prebid.js comes with a resourceful community that can help with questions you might have.
  • Access to analytics. The system provides information about what is working well and whether there are any partners that you can exclude from the wrapper.
  • Adaptability. Prebid.js works for both mobile and desktop, making it suitable for publishers that need both.
  • Fast Auctions. Header bidding auctions with Prebid run fast and include over 300 demand partners.

The Cons Of Using Prebid.js

  • Complexity. Installing and setting up Prebid.js requires extensive technical knowledge. If you do not have the time or an ad ops team to take care of the implementation and maintenance, you won’t be able to use it without external help.
  • Slower page load speed. Prebid.js runs the header bidding auction on the client side, which inevitably causes a delay for the user and decreases page load times.
  • No designated support team. Being able to ask questions in a forum or group of people that use a similar setup to you can be helpful, but sometimes you need expert support for your specific requirements.
  • No demand sources included. Setting up Prebid is just the first step. You’ll also need to create accounts with multiple SSPs.

Given the complexity of implementing and maintaining the Prebid.js wrapper, integrating header bidding without a third party is not for every publisher. It is best to determine if you have the appropriate resources before deciding whether Prebid.js is the right solution for you long term.

What is Amazon APS (Amazon Publisher Services)?

Amazon developed its own programmatic advertising solution (Amazon Publisher Services) to compete with Google. Amazon Publisher Services include the Transparent Ad Marketplace (TAM), the Unified Ad Marketplace (UAM), and Shopping Insight. Both TAM and UAM are cloud-based and rely on header bidding services.

How Does Amazon Header Bidding Work?

Amazon is one of the biggest names in digital advertising. Publishers can enter Amazon’s header bidding program through the Transparent Ad Marketplace (TAM) or the Unified Ad Marketplace (UAM).

TAM is a server-side bidding solution targeted at larger, well-established publishers with individual relationships with SSPs. Amazon TAM users can see reports on all auction records for transparency, allowing them to review CPMs, winners, and bidders for each impression.

In contrast, UAM services are geared towards mid-size publishers that need access to Amazon ads and SSPs that partner with Amazon. Users of UAM can also access a strong set of reporting tools. Amazon services include reporting on bid requests, impressions, and earnings.

What is Google Open Bidding?

In response to header bidding, Google developed its Open Bidding solution. Open Bidding lets you invite third-party demand partners to compete for your inventory in a single auction with real-time, server-to-server bidding. Open Bidding in Ad Manager also provides simplified trafficking, reporting, and billing.

How Does Google Open Bidding Work?

Google Ad Manager handles Open Bidding requests via a “server-to-server” (S2S) integration between publishers and their demand partners. Ad Manager runs a unified auction to determine the best yield after generating an ad request. This allows third-party demand partners to compete in real time for your inventory.

Is Header Bidding Good for Advertisers?

Header bidding is beneficial for everyone in the programmatic ecosystem, including advertisers. Advertisers benefit from header bidding as they gain access to higher-quality placements. Additionally, header bidding increases advertisers’ reach by exposing them to a larger target audience.

The main benefits of header bidding for advertisers are:

  • Disintermediation. All advertisers have the same chance to win high quality ad impressions regardless of whether they use AdX or not. Everyone has equal access!
  • Maximum transparency. Header bidding gives advertisers access to all the publisher’s inventory, so they know what’s available at what price. Previously advertisers could only see the inventory that was offered to them during the waterfall auction process.
  • Better inventory. All advertisers can bid on premium inventory if they bid high enough.
  • Lower discrepancy between true and reported impressions. Google ad manager records an impression as soon as the bid is won; header bidding partners only record impressions once the creative has been delivered. Since a user can leave the page before the creative is delivered, header bidding provides a more accurate count of impressions.

Conclusion

Header bidding is the most effective solution publishers can use to monetize their websites in 2024. If you have been using AdSense or AdSense alternatives to monetize your site, the chances are high that you will increase your revenue even further with header bidding.

Snigel has over 10 years of header bidding and digital monetization experience, and our team of experts is happy to answer any questions you might have. Get in touch to receive a free assessment.

About the Author

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.

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