Header bidding

How header bidding works

Let's take a shoe workshop in Mexico as an example. They make leather shoes and sell them online to Mexico and the United States. Let's take a running-news website as an example. The site is free to read and makes money by selling ad space next to articles. Header bidding is a publisher technique. The shoe workshop does not install it. The running-news website does. The workshop only feels the result: more auctions it can enter, and slightly higher prices when it wins.

Walk the page load. A reader opens a marathon recap on a running-news website. Code in the page header asks a set of exchanges for a bid at the same moment. The shoe workshop's buying software offers a $2.80 bid. Another advertiser offers a $2.10 bid. A third advertiser offers a $1.60 bid. Those bids come back within a timeout, often a few hundred milliseconds. The best bid, the $2.80 bid, is attached to the ad request. The running-news website's ad server compares it against any reserved deals of its own. The shoe workshop wins and the shoe photo renders.

The most common implementation is the open-source wrapper Prebid. Large publishers often run their own variation, or a server-side version, so the extra bid calls do not slow the article down.

What changed when it replaced the waterfall

In the old waterfall, a running-news website ranked buyers by historic average price and called them in order. Buyer one got first look. If that buyer filled the slot at a $2.00 price, buyer four never saw it, even at a $3.00 price. Let's take a shoe workshop in Mexico as an example. They make leather shoes and sell them online to Mexico and the United States. Sitting further down the list, the workshop lost impressions it would have paid more for. Header bidding made those calls simultaneous, so the highest bid in that moment wins.

The practical effect for buyers is that price competition got real. Header bidding also pushed the market toward first-price auctions, where the winner pays what they bid. That is where bid shading came from. Let's take a shoe workshop in Mexico as an example. They make leather shoes and sell them online to Mexico and the United States. The workshop cannot bid its true maximum on every impression anymore without overpaying.

What header bidding means for your buying

Let's take a shoe workshop in Mexico as an example. They make leather shoes and sell them online to Mexico and the United States. The workshop will see the same running-news impression offered through several supply paths. Bidding on all of them means competing with itself. If two of the workshop's seats both bid $2.80 on the same slot, they raise the clearing price and pay more than they needed to. Supply path optimization is the buyer-side answer: pick the shortest, cheapest route to the running-news website and turn the rest off.

Header bidding also means placement-level reporting matters more than domain-level reporting. Two paths to the same running-news website can carry different fees and different viewability (whether the ad was actually on screen). One path puts the shoe ad in the article. Another path puts it in a sticky footer that barely stays on screen. Same domain, different product.

Common header bidding misreadings

• Assuming a running-news domain appearing twice in a shoe workshop's report is fraud, when it is two supply paths to the same page.
• Bidding through every available path to a running-news website and inflating the shoe workshop's own clearing price.
• Treating header bidding as a publisher-only topic and never checking which paths the shoe budget actually took.