Header Bidding

Header Bidding: What Happens Next?

Header bidding won’t be going anywhere anytime soon. As I discussed in my last post, in addition to the significant benefits it’s bringing to publishers, it’s bringing lots of complexities and considerations our industry hasn’t tackled before. That means it will demand more attention than ever before as the need to test and innovate continues to grow.

As we look forward, what changes will we be innovating around in the next year or so? Here are some of the bigger ones we’ve been discussing at Freestar.


A Search for The Optimal Set-Up

Server to Server has understandably been a hot topic when discussing the evolution of header bidding. The big question is, though, is it all or nothing or is there an optimal set-up? Is it all server to server, or is it some combination of machine learning and server to server connection? Is it purely header bidding? That’s the underlying question right now.


A Change in Auction Mechanics

As header bidding evolves, we’ll see changes in how the auction is executed. Right now the second bid price auction is how most of the ad networks work, but we may see that change to first bid price, and then potentially to multiple rounds of bidding. Second bid price made sense when Google maintained power over the auction and there weren’t enough buyers to give any one participant enough confidence to bid as high as they could. Now, since there are plenty of buyers and it’s a very information-rich system, the second bid price is over-benefitting the buyer. Publishers can take back control and run the auction in a way that prioritizes their own interests, not just those of buyers. The priority is no longer just to get buyers to the table. It’s to create an auction that facilitates true competition for valuable publisher inventory.


A Thinning Out of Intermediaries

As I mentioned in my last post, publishers should start to demand more out of their partners, to ensure they’re benefitting equally. As they do this, priorities will shift and they’ll likely realize fewer intermediaries are needed in order to get to the end result. Network exchanges, particularly those who aren’t providing added value or bringing unique demand, will decrease in number. Before header bidding, many networks marketed themselves as having unique expertises and offerings that set them apart, but they were essentially packaging the same demand sources. With header bidding and the disappearance of the waterfall, these networks are winning fewer bids, becoming less relevant, and will be even more at risk when major publishers realize they’re equipped to set up their own relationships directly with DSPs.

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Chris Stark

Chris Stark is a Managing Partner at Freestar.