What is Header Bidding and Why Does it Matter?

Published on October 14, 2021

The Beeswax Team

What is Header Bidding?

Header bidding is an innovation in the digital advertising industry that changes how publishers sell their inventory to the open market. 

Publishers work with SSPs to sell their excess advertising inventory on the open market. Not long ago, Publishers release inventory that is not sold directly through their ad server to SSPs.  SSPs, in turn pass this inventory on to DSPs. Not long ago, Publishers would select an SSP to be the lead auctioneer for certain types of inventory. If the top SSP couldn't satisfy the bid requirements, it would pass on to the next and the next until the inventory was sold. 

Since the auction might be cleared by the first SSP, any bids that might be further down in the waterfall wouldn’t be considered, even if they were higher than the bid of the first SSP on the list.

By moving to the new Header Bidding model, Publishers allow multiple SSPs to bid on an auction simultaneously. This means that the SSP with the highest bid will more frequently win. 

Under the waterfall model, Publishers felt that they were losing money, in some cases a lot of it, and it turns out that this was true. According to Digiday, moving from a waterfall bidding model to header bidding, some Publishers are increasing their CPMs by as much as 50%

Why Does Header Bidding Matter?

Header Bidding provides Publishers far more control over how they monetize their advertising inventory. They have a bit more leverage as they structure SSP deals, and SSPs are under a bit more pricing pressure. 

Header Bidding helps advertisers also. Putting all of the SSPs on a level playing field means that advertisers have a more equal shot at getting the inventory that they need to meet their goals. 

For advertisers that are focused on reaching specific publishers, it enables them to implement Supply Path Optimization to structure the relationship between their DSP and SSPs to get more access to the inventory they need.

Since the bidding process is far more straightforward, Header Bidding increases the ability of both Advertisers and Publishers to get visibility into what’s driving the cost to performance ratio of their businesses. 

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