understanding and leveraging digital advertising most talked

maximizing the header bidding opportunity
MAXIMIZING THE
HEADER BIDDING
OPPORTUNITY
understanding and leveraging digital advertising’s
most talked-about new capability
maximizing the header bidding opportunity
Table of Contents
Overview…..……………….………................................................………………................………................………..........................…….....….. 3
BACKGROUND
For beginners: Understanding ad serving…………………………………………................………................………....................….......….. 5
How header bidding works……………………………………………………………................………................……….....................…………..….….7
Limitations of header bidding……………………………………………………................………................………......................………..…....….. 8
IMPLEMENTATION
Evaluating partners: Do they make header bidding worthwhile?….………................………................……….....................…10
Optimizing your header bidding setup………………….……………................………................……….....................………...............…..11
Using header bidding to drive private marketplace deals……………................………................……….....................……...….… 12
Do next: Get started with header bidding……………….…..………................………................………................................…………….12
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maximizing the header bidding opportunity
Overview
Header bidding has been getting a lot of press recently, but exactly what is it,
and why should you care?
Header bidding is a way for digital advertising sellers to implement programmatically transacted campaigns directly within their ad servers. Used by sellers and
app developers, this technology breaks through the limitations of the traditional
ad server, and exposes every impression to a programmatic marketplace in order to
obtain pricing information for the ad server.
The value proposition for header bidding is actually very simple: it’s all about
maximizing a seller’s control over their advertising setup so they can prioritize buyer
demand no matter how that buyer demand makes its way into their ad server. This
lets them:
1. Maximize their revenue,
2. Scale important relationships, and
3. Determine the precise interaction between campaigns implemented directly through their ad server, and those accessed via automated advertising technologies.
Control for sellers and access to quality impressions at scale for buyers is what
this technology is all about. And the quality and breadth of the inventory, targeting, buyer set, formats, devices and other advertising capabilities header bidding
provides access to is what ultimately drives this technology’s usefulness for sellers
and buyers. Previously, buyers that used real-time bidding technologies (RTB) to
purchase impressions, and/or used automated technologies to set up and execute
private marketplace campaigns, had a tough time vying for high-value impressions
at scale because of the limitations of traditional ad servers, which enjoy wide adoption among sellers.
These types of buyers found themselves locked out of opportunities to scale their
buys with sellers simply because they were transacted through programmatic
pipes, which traditional ad servers weren’t built to integrate with in a flexible way.
(We’ll spend the first section spelling this out in much greater detail.)
The enhanced control afforded by a header bidding setup lets sellers maximize
the revenue opportunity from auction-sourced impressions, and it lets them offer
brands the ability to transact and scale private marketplace campaigns with sellers,
all without being penalized for using automated technologies to create and execute
those campaigns. When sellers are thoughtful about their header bidding setups
and artful about using the technology to have more compelling capabilities conversations with potential buyers, they can maximize the potential of this much-talked
about tech.
In this ebook, we’ll take a deeper dive into why this technology evolved, how it
works, how sellers and buyers can leverage it to maximize the most cutting-edge
opportunities in digital advertising today, and how it can put them on a footing to
rapidly adopt the innovations of tomorrow.
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Background
maximizing the header bidding opportunity
For beginners: Understanding ad serving
The takeaway: Ad serving is a digital advertising delivery and decisioning technology that grew out of a paradigm where impression inventory was reserved ahead of
time, and ad prices were known to the buyer and seller. Now the digital advertising world consists of real-time buying, dynamic prices, and automated advertising
technologies being used to transact premium deals between buyers and sellers. Traditional ad servers have limited sellers’ ability to fully control how all buyers interact with their inventory in this new world.
A header bidding setup lets sellers that use traditional ad servers transact more
effectively with buyers that use digital advertising technologies those ad servers
were not originally built to accommodate.
creatives for different brands and campaigns had been implemented. This was the
ad server. The ad server would respond with the respective ads in a rotation. Thus, a
publisher could make deals with more than one advertiser to run in a single slot.
In order to understand what header bidding is and how to take advantage of the
technology, it’s important to first understand how ad serving itself evolved. Here’s
a greatly simplified history of ad serving that explains the need for header bidding
in today’s landscape. If you understand ad serving, feel free to skip to the next
section. If you don’t quite, read on to learn how this foundational technology makes
header bidding a powerful tool in sellers’ technology arsenal.
But there was a catch: all advertising deals weren’t the same, so an even rotation
wouldn’t do. Publishers needed a way to prioritize ads so their ad servers could
more ably balance the multitude of objectives and impression volumes that a publisher’s multiple ad partners wanted to achieve.
Phase 1: Ad server as delivery and decisioning technology
Let’s rewind the clock about twenty years. The web was a much simpler place
then, and so was digital advertising. Individual web publishers began monetizing
their sites by placing ads on them. In its simplest form, an ad could be a static picture with a link attached to it, but there quickly became a need to create a separate
technology to handle digital advertising for publishers.
SPONSORSHIP
PUBLISHER
DIRECT ORDERS
NON-GUARANTEED
ORDERS
One reason for this was because publishers wanted to sell ad slots to more than one
advertiser. In order to handle this, publishers
needed a way to rotate several advertisers into
a single slot. The solution: the publisher would
put a piece of code on their site that called
another technology where multiple ad
To deal with this, ad servers introduced a ranking system whereby publishers could
assign an overall priority to different advertisers and campaigns, and could also
assign goals to those campaigns. In addition to being a repository and delivery system for advertising creative, the ad server’s primary role was now also decisioning:
figuring out what ads to run, on which publisher pages, for which users, and when,
based on those publisher-assigned priorities and goals for different advertisers and
campaigns.
Phase 2: Third-party buying sources hook into ad servers
Then the digital advertising landscape became more complicated. In addition to
the deals they made directly with brands, publishers began selling the leftover ad
impressions they hadn’t been able to sell directly to brands to ad networks at a
deep discount. Networks got access to the publisher’s inventory through a single
line item in the ad server, the same way a direct-sold advertiser would. Because the
ad network model expressly addressed remnant inventory at first, it made sense
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maximizing the header bidding opportunity
SPONSORSHIP
PUBLISHER
DIRECT ORDERS
NONGUARANTEED
to slot networks in at the lowest rung of the
priority ranking in the ad server, because these
advertisers were the lowest paying and lowest
priority by definition.
Then things got more interesting. Instead
of selling publishers’ leftover inventory at a
static rate, technologies came along that created an auction marketplace for those
leftover impressions, and allowed brands to bid for them. To determine what bids
brands should submit for a given impression, bidding technologies evaluated the
attributes of individual impressions in real-time
SPONSORSHIP
and submitted bids based on the impressions’
predicted value to the brand. Because pricing
PUBLISHER
DIRECT ORDERS
was now dynamic, an impression determined to
be highly valuable might command a price on
par with the prices that a publisher’s premium,
direct-sold advertisers were paying.
NETWORK
NONGUARANTEED
NETWORK /
RTB
Phase 3: Real-time opportunity suppressed by traditional ad serving
This exposed one key constraint of the traditional ad server setup that header
bidding was created to address. Ad servers were set up to prioritize and serve ads
based on known, static prices and campaign goals. They were not built to handle
dynamic pricing, real-time decisioning, or single “pipes” to demand sources containing a widely diverse set of potential buyers.
This meant that even though digital advertising as a whole evolved to incorporate
dynamic pricing, publishers were stuck having to prioritize campaigns in their ad
servers based on a single estimated static price. To account for RTB sources, they
used their best guess of what the average price of all demand coming from dynamic sources looked like, even though the prices that created those averages could be
highly stratified.
For buyers, that meant being mostly locked out of seeing higher-value inventory.
For sellers, it meant denying impression opportunities to brands that were willing to
pay high prices for individual impressions.
Phase 4: Denying parity to buyers that used new advertising technologies to find
premium audiences
But however much traditional ad server setups depress potential revenue coming
from RTB sources, another, even more consequential shift happened in digital advertising that represents an even more significant upside of implementing header
bidding.
That shift is that brands and advertising technologies realized that the same technologies they’d built to transact unsold inventory could also be used to discover,
setup, and transact private marketplace campaigns. Now the types of high-dollar,
custom campaigns that were originally implemented by the publisher directly in
their ad server were being implemented behind RTB line items that were still relegated to the bottom rungs of the ad server’s priority list, unable to compete with
“traditionally” direct-sold campaigns even though their pricing and prioritization
was on par.
A smart new way to transact direct-sold campaigns was being constrained by a
legacy technology.
Header bidding is a major step in the right direction — an incremental solution that
enables the legacy ad serving construct we’ve inherited to address the advertising
automation paradigm that has evolved in our industry.
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maximizing the header bidding opportunity
How the header bidding implementation works
The takeaway: Header bidding employs a JavaScript code implemented in the publisher or app, and special header bidding line items implemented in their ad server.
The JavaScript code runs a “pre-auction” among the partner’s demand sources that activates line items corresponding to the winner in the seller’s ad server. The ad
server then runs its own logic to determine which of all its line item should win. The publisher’s ad server is still the ultimate arbiter of which ads serve.
With an understanding of the constraints of traditional ad servers and the evolution of digital
ad buying, the actual header bidding implementation should make more sense. Here’s how it
works.
In the ad server: One low-priority RTB line item becomes several that reflect pricing diversity
An ad server is both a delivery system for ad creatives that show on a seller’s property and a
decisioning technology that determines which of
myriad eligible ads to show. To enable ad serving,
SPONSORSHIP
publishers place a piece of code in an ad slot on their
PUBLISHER
page that calls the ad server as the page loads. The
DIRECT ORDERS
ad server then decides which advertising line item
should be served based on overall campaign priority
rankings and goals, and returns the corresponding ad
creative to the page.
NONGUARANTEED
RTB campaign until the page loads. So how will the ad server know which of those multiple
header bidding line items to “activate” and use in its decisioning?
This is where the “header” comes in. The publisher inserts a piece of JavaScript code in the
“head” section of their site, which ensures it will be among the first components of the page to
load — before the ad server is called.
Publisher’s Site
1.  FastLane Tag
Rubicon Project
Acocunt / Site / Zone / Size (s)
CPM, Advertiser ID, Deal ID, Ad Script
2.  AdServer request ->
NETWORK /
RTB
Before header bidding, RTB line items were often
at the bottom rungs of the ad server priority ranking
even though buyers willing to pay premium prices were available in that RTB bucket. The header
bidding implementation creates more opportunities
for those buyers — including those whose private
marketplace campaigns get served through RTB
pipes — by breaking up that single line item into
multiple line items that reflect the range of possible
prices and priorities for campaigns that are sourced from automated technologies.
SPONSORSHIP
RTB/PMP
setTargeting(‘rpfl_1234 = 2_1000,’elemid = div-8429’)
Ad Server returns winning creative (ideally Rubicon)
AD SERVER
3.  Browser renders creative from
cache
PUBLISHER DIRECT ORDERS
RTB/PMP
NON-GUARANTEED ORDERS
RTB/PMP
RTB
On the page or in-app: Accounting for real-time bidding with the “header”
auction
Because RTB is real-time by definition, and because it relies on the advertiser knowing the
attributes of an impression before determining their bid in a real-time auction, it can’t be
known which of those multiple RTB line items in the ad server corresponds to the “winning”
That code launches an auction amongst all the RTB partner’s demand sources. The demand
source returns an identifier for the winning campaign that corresponds to one of the header
bidding line items in the ad server. When the ad server is finally called, that identifier tells the ad
server which of the RTB line items should be considered in the ad server’s logic.
“Activating” a line item in the ad server doesn’t mean it will win the impression. It just tells the
ad server which line item it should consider when running its own decisioning among all active
line items.
What makes this technology transformative is that eligible RTB buyers can take their rightful
place at a high-priority slot in the ad server, as opposed to automatically being stuck at the
bottom with lower value campaigns.
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maximizing the header bidding opportunity
Limitations of header bidding
The takeaway: Header bidding simply enables RTB demand to be deaveraged and implemented as separate line items in a publisher’s ad server. Ad server decisioning then takes over. Thus, header bidding gets sellers closer to holistic yield management in terms of its outcomes, but it does not replace the ad server or fundamentally change ad server logic.
We’re spending a lot of time on making both the purpose for header bidding and the exact way it
works very clear, because it’s important to understand these mechanics in order to leverage the
technology.
Before we move on to some tactics you can use to enable header bidding to drive more revenue and
better relationships, we’re going to consolidate your understanding by underscoring what header
bidding isn’t.
Header bidding does not control ad server decisioning
But it does create a more robust set of options for the ad server to decision on
Header bidding launches a real-time auction among an advertising technology partner’s buyers to
determine a winning campaign from that universe of buyers. The header bidding implementation
can then identify the line item corresponding to that winning bid in the ad server and “activate” it.
The ad server then decides which ad to serve from among all eligible line items the publisher has
implemented, based on its own decisioning logic.
This means the RTB line item setup implemented by the publisher within its ad server can make a
significant difference for the types of results that publisher sees with header bidding. While simply
firing up header bidding technology can create some lift for the publisher, having access to premium
deals and creating a smart line item setup are what will really enable header bidding to move the
needle for publishers. (We discuss tactics for doing both in subsequent sections.)
opportunity for automated demand sources to compete with “traditionally” implemented campaigns, but it ultimately still relies on a publisher ops team to manually implement and rank advertisers, campaigns, and demand sources, and to occasionally evaluate and tinker with that setup to
achieve better results.
Header bidding does not change the way AdX interacts with DFP
But it does create a fairer landscape and make AdX work harder
You might have heard it said that header bidding thwarts AdX exchange inventory from enjoying an
advantage with users of DFP, which is Google’s widely adopted ad server. That’s not true, but here’s
what is meant by that statement:
In addition to owning DFP, Google also owns the AdX exchange. Because of this, DFP is able to offer
a feature to its publishers called enhanced dynamic allocation (often referred to as EDA). Enhanced
dynamic allocation lets publishers opt to serve an impression to an AdX buyer instead of one of its
ad server line items if:
1. The AdX buyer is willing to pay more than what the winning line item would have paid,
2. Letting the AdX buyer win the impression does not affect that line item’s ability to get all the impressions it reserved (if impression delivery is a goal)
Header bidding is not holistic yield management
But it is a step in the right direction
When header bidding is activated, it means there are now additional line items in the ad server that
the AdX buyer must be evaluated against, but header bidding does not block the enhanced dynamic
allocation functionality. (EDA also only works for AdX-sourced impressions. Turning it on does not
activate the capability for other partners.)
Imagine a world where an ad server could simultaneously and automatically maximize impression
delivery for brands, maximize yield for sellers, and expose brands to as many high-priority impressions as possible no matter where that demand is coming from.
What it does do is expose AdX to line items that may be valued higher than AdX is willing to pay,
thus putting greater competitive pressure on AdX, and ensuring fairer outcomes all around. Impressions from AdX will have to work harder to win when automated demand can fairly compete.
This is the holy grail of ad serving, but header bidding doesn’t quite get us there.
Header bidding is a significant step in the right direction in that it allows a lot greater flexibility and
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maximizing the header bidding opportunity
Implementation
maximizing the header bidding opportunity
Evaluating partners: Do they make header bidding worthwhile?
The takeaway: Header bidding provides a throughway to the technology partner’s inventory, buyers, and technology stack. Thus, header bidding is only as useful as
the marketplace it hooks into.
Now that you understand what header bidding is, why it exists, how it works, and what its
limitations are, let us consider ways to maximize this technology.
Header bidding is essentially a throughway to quality inventory at scale for private marketplace and RTB buyers willing to pay top dollar for premium inventory, and it’s a throughway
to premium buyers for publishers who wish to grow their relationships and maximize revenue,
particularly among buyers who use programmatic and/or automated advertising technologies.
Header bidding gives these buyers a much fairer shot at competing with a publisher’s traditionally implemented campaign for impressions.
In light of this, a header bidding technology is only as useful as the universe of quality inventory,
buyers, buying types, formats, and devices the technology provides a gateway to.
Collating the highest-quality inventory possible
The best bidding technology is for naught if it’s optimizing yield against subpar inventory.
A partner should collate the best possible inventory in terms of quality, and enable access
to the most types of inventory in terms of format. This means not only optimizing publisher
relationships, but also enabling the breadth of mobile web, mobile app, and video formats
to be addressable by the technology. (For our part, Rubicon Project offers industry-leading
brand protection and security tools to create the cleanest and highest-quality inventory pool
possible.)
Affording full flexibility
The purpose of header bidding is to give publishers full control over their digital advertising
setup, and to enable brands that purchase programmatically to see, and potentially win, their
fair share of high-value impressions.
At Rubicon Project, we’ve made it a priority to solve for the other variables that actually make
our FastLane header bidding solution worth having in the first place. Here are the elements
we’ve implemented that actually enable header bidding to move the needle. These are tests
that any header bidding partner must pass to make them worth onboarding:
To deliver on that promise, sellers should have full autonomy over the number of header bidding
items they set up in their ad server, as limitations on the number of header bidding "slots"
creates an artificial constraint on sellers.
Enabling header bidding on mobile
A solution like header bidding should account for mobile which, as a younger channel than
desktop, should inherit the innovations we’ve created for desktop a lot earlier. (Rubicon Project
offers the first header bidding solution for in-app mobile inventory, across both smartphones
and tablets, and on both the iOS and Android operating systems.)
Optimizing user experiences
At a time when users have easy options to opt out of digital advertising almost completely,
all of the above works to the benefit of the consumer, from enabling accurately valued bids to
compete for impressions, to reducing passbacks that can slow down load times and cheapen
user experiences.
Empowering buyers and sellers to transact in all ways
Likewise, header bidding works best when all buying types — direct-sold inventory, private
marketplaces, and auction-based bidding — are competing within the bid stack. An ideal
partner should have invested considerable resources in developing the technologies to automate all of these buying types, including creating the mechanisms to bring the most inventory
into a single, dynamic marketplace, thus helping to create a robust ecosystem against which
publishers can run a full-funnel yield strategy.
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maximizing the header bidding opportunity
Optimizing header bidding setups
The takeaway: Header bidding technology provides a means for sellers to treat programmatically bought and/or executed campaigns similarly to campaigns implemented directly within the ad server. As with its traditionally implemented campaigns, the way line items are set up will have a significant effect on header bidding
outcomes. Sellers should carefully consider their tactics to drive the most value from the technology.
We’ve pointed above to what a technology partner should offer to make header bidding worth
implementing at all, but how should publishers think about implementing header bidding in a
way that maximizes the opportunity? Here are a few high-level guidelines for header bidding
setups.
Your goal with header bidding is to set up tiers in your ad server that properly prioritize real-time
buyers. One way to do that is to look at the way RTB clearing prices are actually distributed,
and then set up pricing tiers that will effectively “catch” those bids and can be slotted in at
the right priority in your ad server hierarchy. (Rubicon Project customers can work with their
account managers to analyze their Market Discovery report, which provides an analysis of bid
clearing prices by volume.)
When deciding at what increments you should set up header bidding tiers in your ad server,
there are a few rules of thumb you should follow:
1. Be consistent. If you already have a header bidding setup implemented, you should match subsequent setups to your existing one(s). This will ensure that all of your partners are equally competitive, and will provide clarity about performance.
publishers using enhanced dynamic allocation should establish even finer tiers at the
bottom, all things being equal.
3. Map to the demand distribution in the ad server. Header bidding setups should compete with every single channel of demand in the ad server, including traditionally implemented direct campaigns. In light of this, tiers should also map to those campaigns so that header bidding can drive competition at each price point. We'll discuss how to use header bidding to drive more private market place deals that compete at higher tiers in the next section.
4. Be mindful of diminishing returns. Granular tiers can provide performance benefits by more precisely mapping bid values to line items at higher priority levels, but trafficking and implementing this also represents a significant upfront investment in time. If your partner provides reporting on clearing prices, you won’t need to worry about setting up granular tiers for analytics purposes: your partner’s reporting should plot clearing prices irrespective of
your line item setup (again, Rubicon Project’s Market Discovery report provides this insight). Avoid the diminishing return of setting up tiers so finely that doing so multiplies work but doesn’t change performance outcomes.
For example, imagine one partner has a $2 – to $2.99 tier, and another has tiers at $2 to $2.49 and $2.50 to $2.99. If a buyer comes in with a bid of $2.75, the partner with the more granular setup will have an artificial advantage because they’re placed within a tier that exceeds that $2.50 floor.
Creating consistent setups ensures a “clean” structure that promotes fairness and makes it easier to make sense of results.
2. Smaller granularity at the bottom. Generally, there’s a lot more competition and volume at the lower CPM tiers. As a result, publishers should typically create smaller tiers at the bottom price level. It’s common to see tiers at $0.05 to $0.10 increments up to the
$2 to $4 range, then jump to $0.25 to $1.00 up to about the $10 to $15 range. DFP
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maximizing the header bidding opportunity
Using header bidding to drive more private marketplace deals
The takeaway: Header bidding is often spoken about in terms of its ability to let high-bidding auction buyers win high-value impressions, resulting in greater revenue
for sellers, and greater return on investment and scale for buyers. While this is one consequence of header bidding, the higher-impact use of the technology entails
using header bidding to drive more private marketplace deals.
Header bidding gives sellers control over how they set up campaigns in their ad servers. While
simply turning on header bidding can result in some revenue lift by giving RTB buyers a better
shot at winning high-value impressions for themselves (and higher yielding impressions for
sellers), there is a higher use of the control header bidding affords sellers: using it to facilitate
private marketplace deals. Here are a couple ways to approach header bidding that will help
achieve that result.
Consider prioritizing relationships over price
Header bidding isn’t just about maximizing high-bidding auction buyers. Through a thoughtful
setup process, sellers and buyers can use it to develop private marketplace relationships that
are facilitated by cutting-edge advertising technology.
With header bidding, a seller has total control over which deals get priority in their ad server.
The header bidding technology should be flexible enough to let sellers specifically target a deal,
a set of deals, or a specific buyer, and sellers should be able to choose setups that increase
spend through buyer preference and/or let audience-based buys drive PMP deals (Rubicon
Project’s Fastlane can execute all of the above). These types of tactics can let sellers and
brands have a lot more control over deals forged through their private marketplace relationships.
Use header bidding as a sales tool
With header bidding, sellers can feel confident about delivering more scale to their buyer partners without having them be penalized for using digital advertising technologies to implement
and execute their campaigns. In addition, sellers can layer in all of the capabilities of digital
advertising partners, including data layering, to sweeten the pot for potential buyers. Sellers
should feel at liberty to go to market aggressively with these capabilities at their backs, and use
them to initiate more interesting execution conversations with brands.
In sum, sellers should use header bidding to attract and execute more private marketplace
buyers, which have been constrained by traditional ad server setups in the same way auction-sourced buyers have.
DO NEXT: GET STARTED WITH
HEADER BIDDING
In this ebook, you’ve learned:
1. How the evolution of ad serving created the technological constraints that made header bidding necessary in a world of advanced advertising technologies
2. The mechanics of a header bidding setup
3. What some common myths and constraints of the technology are that can facilitate your clarity about how to put the technology to best use
4. Why your header bidding partner’s overall technology stack and partnership set matters for your results
5. How to think strategically about planning your header bidding setup and using it to drive more private marketplace deals
So what should you do next? We recommend taking a look at your current setup
and imagining how you would change it if the method by which buyers access your
inventory were no longer a constraint.
Rubicon Project offers a next-generation header bidding solution called
FastLane. Contact your Rubicon Project account manager to work through this
exercise alongside our team, and start discussing a roadmap for tactical
planning, setup, execution, and optimization of header bidding through our FastLane solution.
For more information on our header bidding solution,
visit content.rubiconproject.com/fastlane
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maximizing the header bidding opportunity
RubiconProject.com | @ RubiconProject