“The Sell Sider” is a column written for the sell side of the digital media community.
Today’s column is written by Will Doherty, vice president of business development at Index Exchange.
Header bidding is the rare ad tech phenomenon where the noise is equal to the fury. Its staggering growth and adoption has propelled it past fad and into the mainstream to encompass multiple modes of buying before anyone even noticed.
A few years ago, the industry collectively recognized a multitude of ways in which buyers and sellers could interact programmatically beyond RTB. While the open market and bidding were hallmarks of display, buyers and sellers immediately tried to replicate the standard digital buying process, conducted through ad tags and IOs, so that they could gain the efficiencies in automated trading. Private marketplaces (PMPs) were quickly codified into industry standards, and ad tech raced to facilitate the sale of premium media to quality demand.
This was an important innovation since it also helped dispel the myth that RTB was a race to the bottom. Programmatic was becoming a market where premium publishers and buyers could interact directly and negotiate their commercial terms. Buyers could leverage audience insights via their demand-side platform (DSP) to choose the impressions they wanted. Publishers had a large, on-demand market connected directly to their supply. This access created more avenues to faster transactions at greater scale to more relevant audiences.
How does a buyer know if they have achieved a certain level of priority? This is where win rate becomes the most valuable metric for traders. Buyers are no longer competing for an impression based on another bid. In the waterfall, a buyer’s win rate depended on beating another buyer’s bid for an impression within a particular exchange and was historically low, in terms of the publishers’ ad server’s priority. A buyer could have a high win rate within a fairly small band of available inventory since competition was limited to other buyers at that moment.
In the header, a buyer’s opportunity expands to the entirety of a publisher’s inventory and competition comes from directly booked campaigns and other buyers. While biddable units are traditionally digital display, the header can execute additional outputs, including video, skins, overlays and buyouts.
It is much denser than anything buyers have seen in the past and also more competitive, making PMPs wildly more important because paper contracts can be moved into platforms for the first time.
Buyers could always place a direct buy outside of their DSPs, and many still do, but that fragmentation is now unnecessary. Buyers can obtain the same level of priority with the added benefit of only choosing the impressions they want. The guarantee doesn’t change, but the mechanism does.
In the past, a sponsorship-level buy was always reserved for more valuable inventory but those opportunities never filtered down to the exchanges. Now, buyers simply can’t bid their way into that priority. The ad server will not consider it unless given specific authority, and a PMP can give the publisher that authority and treat it like any directly booked campaign.
Bidding is only the tipping point for a countless number of execution points that can be explored in the header. This also means a marked acceleration of paper contracts into programmatic with enhanced access and additional execution models at our disposal.