Programmatic Advertising: From Waterfalling to HyBid
Header bidding took the digital advertising world by storm when it became popular almost five years ago. Also known as pre-bidding, the programmatic technique enables publishers to offer their ad inventory to numerous exchanges simultaneously. This is done before calling their ad servers. The process allows publishers to increase their yield, maximize revenue and ensure that they gain the most value from their inventory. The innovative practice was gladly received by publishers wanting more control over their ad space and by advertisers wanting a more transparent buying experience. Header bidding also allowed buyers to access sought after ‘premium’ inventory as it became available for bidding.
What Came Before Header Bidding?
Before header bidding enhanced the ecosystem, ‘waterfalling’, or ‘daisy chaining’ as it is also known, was the primary method of auctioning ad inventory. The waterfall system works by redirecting publishers’ unsold inventory from one network to the next. This is carried out in descending order until the impression is picked up. The ad is served when the requirements for the ad request (based on previous data) and floor price is met. However, the winning bid can be often lower than the floor price requested.
This method is highly inefficient and wasteful as the passing around of the impression results in high latency (the time it takes for an ad to load). In addition, publishers are unaware of where their inventory is being sold and by using this method, they are missing opportunities to maximize their revenue potential as the cost of the impression lowers each time it is rejected.
The advanced and highly adopted solution of header bidding eliminates these passbacks and missed opportunities. So, it was only a matter of time before the method shifted to the in-app environment.
In-App Header Bidding in Today’s Advertising Marketplace
eMarketer reports that over half of US publishers that sell ads programmatically on the web adopted header bidding as of last year. On the other hand, mobile in-app header bidding is being adopted at a slower pace than on web. Due to in-app being a completely different environment, the method of header bidding, of course, will not have the same application and adoption. Struggles with ‘server-to-server setups and SDK integrations’ contribute to the low adoption rates of in-app header bidding. However, with more testing and mobile-first approaches by solution providers, these rates are set to increase as the year goes on.
The mobile in-app ecosystem is an alternate universe that has different device & browser fragmentation, different internet connectivity and processing power resources. Along with this, mobile apps are designed and built disparately to those in the web environment. Content is also delivered to the user in a different way, taking into account both technological and user experience constraints of the mobile in-app environment.
A Hybrid Solution to Solve Publishers’ Needs
PubNative’s hybrid technology HyBid SDK enables publishers to carry out a parallel auction, receiving bids in real-time prior to their ad server making an ad call. HyBid removes the inefficiencies linked to the traditional waterfall system and ensures the highest yield across ad formats. The advanced solution offers publishers a way to effectively monetize their ad inventory in a seamless way, designed solely for the mobile in-app environment. HyBid enriches bids with publisher’s first-party and CRM data that is also used to predict price floors and create audience segments – including on the user level.
The method of waterfalling can result in a negative user experience and produce challenges both operationally and on a technological level. However, the market is not fully ready to make the switch to exchange bidding as it is not yet generating more or even an equal amount of yield as waterfalls.
While alternative in-app header bidding solutions are pushing ‘one or the other’, PubNative offers a hybrid solution that takes advantage of the future (exchange) but plugs it on top of the existing setups (waterfalls) without a need to use one or the other option exclusively.
HyBid not only solves ad monetization problems for in-app first publishers in an ideal world, but it does so already with all of the market inefficiencies and challenges present today.
It may take some time before in-app header bidding is at the same level as the technology available for the web environment, but our hopes are high for the future of mobile programmatic advertising.