Header bidding, it’s undeniable that technical terms don’t come much blander. But, this humble programmatic process has become a major talking point for the digital advertising industry – even threatening the dominance of Google’s ad server DoubleClick.

So what’s so great about this emerging technology and why is it having such a disruptive influence on the industry?

What is Header bidding?

Header bidding goes by a number of aliases including tagless implementation, advanced bidding, or pre-bidding, yet it’s original name offers the best description of what it does. It’s a smart advertising technology that places a piece of code into the header of a webpage. This code instantly makes ad impressions available to multiple demand sources, prior to the publisher’s ad server being called. The demand sources are given the opportunity to bid with dynamic pricing and their bids are included when the ad request is passed to the ad server.

Still confused? Check out this animated infographic from OpenX for a detailed yet digestible explanation.

Why does it matter to publishers?

The new technique is great news for publishers as it avoids the programmatic waterfall process where an impression is offered to demand sources sequentially, in order of perceived value, which limits competition resulting in limited yields. It also eliminates passbacks – where an impression is redirected to the ad server for reallocation if the floor price isn’t met – which inevitably lead to wasted impressions. Finally it allows publishers to understand the true value of their inventory as they can sell on a per-impression basis, gaining the maximum revenue for each impression.

And everyone else…?

Publishers aren’t the only ones to benefit. Advertisers are also rewarded as they can gain access to impressions at a higher priority than with the waterfall, and they receive a bid request for each and every impression, giving them a far better overview of available inventory. Header bidding allows advertisers to take a first look at inventory in a RTB environment, enabling them to use programmatic to compete with direct sold campaigns for the first time. This will undoubtedly lead to increased adoption of programmatic advertising in every global market, as well as better digital strategy and possibly the evolution of new programmatic trading models.

Prior to the development of header bidding, an integration between DoubleClick, Google’s ad server, and its ad network AdX provided Google’s demand sources with a potentially unfair advantage over other sources through the process of dynamic allocation. By making an instant-bid tool widely accessible, the technique has a addressed this imbalance by enabling other demand sources to view impressions before they are sent to the ad server.

Headers versus Google 

But advances moeres quickly in the world of ad tech and Google has already provided its answer in the form of DoubleClick for Publishers First Look, which allows publishers to give certain buyers the chance to bid on 100% of their inventory. In promoting this new solution, Google emphasises the negative impact header-based mechanisms can have on website latency. While this is a valid point, other new technologies have already been developed such as header bidding wrappers to combat latency issues.

It may be a relatively simple technical process but, with extensive benefits on both the sell and buy side, header bidding is shaking up the digital advertising industry, and has far reaching implications that will permanently change the shape of programmatic.