Header Bidding & AdEx: A Quick Intro

Posted by AdEx Network on June 14th, 2019

Insights

Let’s start with a simple explanation of header bidding (also known as advanced, or pre-bidding): it’s a programmatic advertising technique, which allows publishers to offer their inventory to multiple advertisers simultaneously before even the ad server is called. It all happens in the header of the webpage (hence the name). Because the process happens automatically and to all advertisers at the same time, it guarantees the best price for the inventory. Header bidding not only increases the revenue for publishers, it also offers premium inventory for the advertisers. Basically a win-win scenario!

So how does header bidding work?

When a page begins to load, the visitor browser would call all the demand partners (advertisers) at the same time and ‘ask’ them how much they are willing to pay for the available ad slot(s). They each make a bid and the system automatically picks up the best bid based on price and targeting. In simple words, it’s an automated auction which happens in seconds in the background.

Header bidding was developed as an alternative to waterfall auctions — namely offering the inventory to the highest bidder first, then second highest etc. until it is finally accepted. Waterfall auctions aren’t exactly favourable to publishers. The first reason for this is, they are not able to choose who to work with. Then, these auctions lower the value of the inventory by passing it further down the ‘waterfall’.

Header bidding, on the other hand, gives a chance to all advertisers to bid at once. This means that publishers get a better price for their available ad space, and advertisers can get premium inventory previously reserved for the select few on top of the chain.

Why does header bidding work?

The traditional sequential ad-serving waterfall can often mean loss of revenue for publishers (e.g. having to accept a lower bid if rejected by top-paying advertisers) — and nobody wants that, right? Advertisers wouldn’t want to wait for picking slots — and end up with ‘whatever is left’ either. So a clever new way that still leaves publishers in control of the auction while producing great results is really a no-brainer.

Header bidding doesn’t only result in an increase of revenue for publishers by selling at higher prices. It also means that they can work with a lot more, and more varied advertisers so that less space will remain unsold. On top of that, header bidding improves transparency and bid management for publishers.

This democratised method of trading inventory where no party gets preferential treatment makes the process a lot more transparent. Unlike RTB which happens on the server side, header-bidding occurs in the browser and all the information on how the auction is conducted is essentially there.

Advertisers also benefit from it. Not only do they get first pick of the available inventory, they can also use the bidding technology to optimize targeting. They have access to more data, e.g. the number of impression and demographics of the website visitors, to help them target customers more efficiently.

So how do we do it?

The AdEx SDK adex-adview-manager implementation pulls all of the information about demand (campaigns, bids) in the browser, and directly select the bid depending on what we know about the user. In other words, it effectively implements targeting without revealing the user’s profile. It essentially replaces the ad exchange that would otherwise be involved in a header bidding process, eliminating it as a middleman.

The adex-adview-manager serves a number of purposes, such as: creating a crypto identity for the end user, pulling all the possible demand from the market, generating events (impressions, clicks) and sending them to all validators and observers of an ad, learning about the user in order to achieve meaningful targeting. We use contextual targeting — offering ads related to the content the end user is currently browsing. Because of that, we do not need to save any user data.

The adex-adview-manager picks which ad to show depending on the user: this means running a quick blind auction, and picking an ad depending on a combination of price and targeting, a.k.a. header bidding.

Furthermore, the adex-adview-manager can be used in your application as a library, which allows deeper integration: e.g. building native React components for ads, controlling parameters (targeting, min accepted price) dynamically, and implementing passback.

Our SDK is completely browser-agnostic and runs in an iframe tag on the publisher’s webpage.

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