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Understanding Header Bidding

Different ad buyers feel the effects of header bidding differently

October 6, 2017 | Marketing Technology | Media Buying

To understand how ad buyers are implementing header bidding, it’s critical to have foundational knowledge of what header bidding is and how it works.

At its core, header bidding is a programmatic tool that allows publishers to offer ad inventory to programmatic buyers first, before consulting their ad server.

According to eMarketer’s new report, “Header Bidding for Ad Buyers: What Brands, Agencies and Buy-Side Platforms Need to Know,” this is a notable difference from how programmatic initially fit into a publisher’s monetization strategy. Prior to header bidding, publishers relied on their ad server to decide which advertisers had access to which impressions.

(Subscribers to eMarketer PRO can access the report here. Nonsubscribers can purchase the report here.)

US Agency and Marketing Professionals' Level of Understanding of Header Bidding, Jan 2017 (% of respondents)

In a typical setup, an ad server might first consider any direct-sold deals made by their sales force, followed by any preferred ad network partners, and then programmatic sources of demand, such as an exchange. In this model, known as a “waterfall” scenario, programmatic often served as the secondary or even tertiary recipient of a publisher’s inventory.

But with header bidding, programmatic buyers are granted a first look. That means they get greater access to publisher inventory that was once reserved solely for specific buyers. Today, header bidding is mostly used by desktop display or mobile web publishers. However, it is gaining in popularity for mobile app and video publishers.

Publishers have been actively pursuing header bidding over the past 12 to 24 months. But it has only just started to spark the attention of advertisers and ad buyers, who are feeling its effects in different ways.

A sizable portion of agencies and marketers are still relatively unfamiliar with header bidding. A January 2017 survey of US agency and marketing professionals conducted by Advertiser Perceptions found only a quarter of respondents had a “good” or “very good” understanding of header bidding. While nearly a third had a “moderate” understanding, almost half were still lacking in education on this front.

“In the negotiations that we’re seeing for campaigns, header bidding isn’t coming up just yet,” said Eli Chapman, vice president and managing director of media at digital advertising agency R/GA. “Buyers are more focused generally on the programmatic availability of inventory or programmatic capabilities for direct deals.”

Experts who spoke with eMarketer acknowledged that in the short term, many brands and advertisers are more focused on aspects of programmatic advertising strategies that bring more tangible, immediate benefits—such as direct deals or private marketplaces (PMPs)—vs. header bidding, which is still considered by some as a tool designed for publishers, and not necessarily buyers.

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