The whole programmatic ecosystem consists of many moving parts, it has its systems and algorithms that are all important for it to function correctly. And just as any system in programmatic, header bidding has a scheme of how the banner ends up on a publisher's website and how the ad dollars reach publishers. It's important to explore this revenue stream journey to understand why the end result (ad revenue for a banner) can differ even if the actual banners look the same.
How does the programmatic ecosystem function?
To explain more clearly, there are two sides to the programmatic ecosystem. The advertisers' side and the publishers'.
DSP is used by advertisers and it is a system that allows advertisers to buy ads in an automated way.
On the publishers' side is an SSP that allows them to sell their advertising spaces or inventories automatically.
When does header bidding come in?
Header bidding as a technological solution is used by publishers and ad networks. It connects them to multiple SSPs and other demand partners instead of just one.
Anyone who has had any experience with Header Bidding might already know all the moving parts about this technology. The solution itself is not easy to develop and sustain, it does require a certain set of skills to firstly build and secondly maintain.
So what exactly is header bidding?
Header bidding is an advanced programmatic technique wherein publishers offer inventory to multiple ad exchanges simultaneously before making calls to their ad servers. The idea is that by letting multiple demand sources bid on the same inventory at the same time, publishers increase their yield and make more money. (Source: Digiday
Small and medium-sized publishers struggle to develop a header bidding solution themselves because the maintenance of this solution requires a lot of time and technical resources.
Who offers a Header Bidding solution?
First of all, Header Bidding is facilitated by prebid.js which is an open-source solution. It means that any skilled programmer can implement it on the website. The devil lies in the details, which means that if not used right, Header Bidding will not generate additional revenues. Also, there are ready-made SaaS solutions offered by SSPs or other companies.
But there are a few things to keep in mind when choosing such an in-house solution:
- You still need to have multiple SSP accounts which might be even impossible for medium and small publishers;
- Management of several SSPs takes more time and turn out to be costly;
- You need to make granular optimization within Google Ad Manager or for prebid.js to achieve maximum efficiency in terms of ad revenue;
- There are many additional tweaks, tricks, and fixes that may not be included in the package you are about to purchase.
Where do yield managers come into the mix?
Yield managers, like Setupad, not only offer a full-service HB solution but also take care of other processes that would further increase publishers' ad revenues, such as ad delivery optimization and efficiency, loading speed optimization, ad inventory audit, UX analysis and measures of invalid traffic prevention.
Back to payments, who pays whom?
Advertisers who run ads via DSP are paying the DSPs, they, in turn, pay the SSPs who then further pay the yield management agencies or publishers directly.
There is no minimum or maximum number of SSPs that can be associated with header bidding. The optimal number is between 10 and 12. Keep in mind that the more SSPs there are, the more complex it gets when it comes to payments.
Few things that make the payments complicated
Working with multiple SSPs publishers have to bear in mind that:
- Not all SSPs work with the same currency. Typically you need to manage the currency exchange rate between Euros and Dollars;
- SSP commissions differ. While some of them bid net values, others bid gross. The payment due days can vary between 30 and 90 days.
Why is it worth working with more than one SSP?
Publishers using only one SSP are missing out on ad revenue because brands tend to use specific DSP and SSP systems that are tailored for specific campaign objectives. For example, the way of purchasing brand awareness campaigns is completely different from buying retargeted users. By not connecting to the right SSP you lose the potential ad revenue from these advertisers.
What are the associated risks for agencies?
- Invalid traffic ( takes up to 1% out of publishers ad revenue);
- Low-quality ads and malvertising;
- Other discrepancies and cashflow risks.
Yield managers have developed several solutions dedicated to battle these issues that all publishers are facing. This serves as an added benefit when partnering with a yield manager. And without them, publishers would have to fix these issues on their own.