Introduction to Header Bidding

Introduction to Header Bidding

Summary

This article provides a straightforward introduction to header bidding, a technology that helps website publishers increase their ad revenue. We'll cover what it is, how it differs from the traditional "waterfall" method, and key concepts like different bidding types.

The Old Method: Understanding the Waterfall Model

To understand header bidding, you first need to know about the old method it replaced: the waterfall model. 

Imagine your ad space is being offered to advertisers in a single-file line, one by one.

  1. Your ad server first offers the ad spot to Partner A.

  2. If Partner A doesn't want it or doesn't meet the minimum price, the server then offers it to Partner B.

  3. If Partner B passes, it goes to Partner C, and so on.

The primary concern with this method is that you may lose money. Partner A might bid $1.00, which your server accepts. However, Partner C might have been willing to pay $3.00, but they never got the chance to bid because the spot was already sold.

The New Method: How Header Bidding Works 

Header bidding gets rid of the single-file line and replaces it with an open auction.

Instead of offering your ad space to partners one by one, header bidding invites multiple advertising partners to bid on the space at the very same time. This simultaneous auction is made possible by a small piece of JavaScript code placed in the <head> section of your website's HTML.

All bids are collected, and the highest bidder wins. This ensures that you get the maximum possible revenue for every single ad impression.

Key Concepts in Header Bidding

There are a few important terms to understand when discussing this technology.

Client-Side vs. Server-Side Bidding vs. Open Bidding

This refers to where the ad auction takes place.

  • Client-Side Header Bidding: The auction runs directly within the user's web browser (the client). This is the original method and is generally easier to set up. 

  • Server-Side Header Bidding: The user's browser sends a single request to a dedicated auction server (the server). That server then calls all the ad partners and runs the auction. 

  • Open Bidding:  This is Google's own server-side bidding solution. Instead of running through an external header bidding "wrapper," it allows other advertising exchanges to compete in a real-time, server-to-server auction directly within Google Ad Manager (GAM). 

What About Latency?

Latency is the technical term for a delay or slowdown. It's a common misconception that header bidding is always slower than the waterfall.

In a waterfall, ad calls are made sequentially (one after another). If you have five partners in your waterfall, and each takes a moment to respond, those delays add up, potentially slowing your page load significantly.

Header bidding, on the other hand, makes all calls in parallel (at the same time). The entire auction is governed by a timeout setting (e.g., 1-2 seconds) that determines the maximum time the auction can run. Because of this parallel auction and fixed timeout, header bidding is often significantly faster than waiting for multiple partners to respond one by one in a long waterfall chain. While header bidding is generally faster, server-side solutions further improve latency by moving the auction from the user's browser to a dedicated server for even better results.

Main Benefits of Header Bidding 

  • Increased Revenue: By having all partners bid at once, you create a competitive auction that drives up the price for your ad space, ensuring you get the highest possible value.

  • Greater Competition: More ad networks and exchanges can bid on your inventory, which prevents any single partner from having an unfair advantage.

  • Increased Transparency: You get to see what everyone is willing to bid for your ad space, giving you a clearer picture of its true market value.

Key Takeaway

Header bidding has become the industry standard because it replaces the inefficient waterfall system with a unified auction. This creates a fairer and more competitive environment that allows publishers to maximize their ad revenue. Our proprietary header bidding solution fully supports all of these concepts—including client-side, server-side, and Open Bidding—ensuring your monetization strategy is built using the latest industry practices and regulations.