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How do you balance the trade-off between header bidding and direct deals or private marketplaces?

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Programmatic media buying is a way of automating the process of buying and selling digital advertising space. It involves using software and data to match advertisers with publishers, and to optimize the performance and price of each ad impression. There are different methods of programmatic media buying, such as header bidding and waterfall, that have different advantages and disadvantages. In this article, we will explain what header bidding and waterfall are, how they work, and how to balance the trade-off between them and direct deals or private marketplaces.

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Robert Weatherhead

International Digital Marketing Consultant: SEO, Google Ads, Paid Social and Advertising Technology

1 What is header bidding?

Header bidding is a method of programmatic media buying that allows publishers to offer their ad inventory to multiple demand sources simultaneously, before sending the request to their ad server. This way, publishers can increase their revenue by creating more competition and transparency among the buyers, and by reducing the latency and inefficiency of the traditional waterfall method. Header bidding also gives publishers more control over their ad inventory and pricing, and enables them to access more demand sources and formats, such as video and native ads.

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Robert Weatherhead

International Digital Marketing Consultant: SEO, Google Ads, Paid Social and Advertising Technology
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Header bidding was largely seen as a method of increasing sell rates for publishers as it allows everybody to bid equally for each impression. In a waterfall scenario the publisher may accept a lower bidder from their first buyer source, when there was more money on offer from another source further down the chain. Header bidding accepts all bids at once allowing the highest bidder to wine. It is not a perfect solution however, and some technologies may still receive "first look", and if the header bidding solution is themselves a DSP with buyers they may see their advertisers win more often either through bias in the platform or simply less latency in the process.

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2 What is waterfall?

Waterfall is a method of programmatic media buying that involves sending ad requests to different demand sources sequentially, based on a predefined priority or ranking. The highest-ranked demand source gets the first chance to bid on the ad impression, and if it does not fill it, the request is passed to the next one, and so on, until the impression is filled or the end of the waterfall is reached. This method is simpler and easier to implement than header bidding, but it has several drawbacks, such as lower revenue, lower fill rates, higher latency, and less transparency.

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Robert Weatherhead

International Digital Marketing Consultant: SEO, Google Ads, Paid Social and Advertising Technology
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Waterfall was the original approach for programmatic buying as publishers looked for additional advertiser sources and to increase fill rates. It is often appealing for publishers to just add in another advertising provider to try and drive up revenues, and waterfall is the solution for adding preference to them. It shouldnt reduce fill rates, but it certainly will increase latency on ads if there is no buyer in the top source of the waterfall.

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3 What are direct deals and private marketplaces?

Direct deals and private marketplaces are ways of programmatic media buying that involve a more exclusive and negotiated relationship between publishers and advertisers. Direct deals are agreements between publishers and advertisers to sell a specific amount of ad inventory at a fixed price, usually through the publisher's ad server. Private marketplaces are similar, but they allow publishers to invite a select group of advertisers to bid on their ad inventory through a programmatic platform, such as a supply-side platform (SSP) or an ad exchange. These methods offer publishers and advertisers more control, quality, and security over their ad transactions, but they also require more resources, time, and trust.

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4 How to balance the trade-off?

Finding the right balance between header bidding, waterfall, direct deals, and private marketplaces is not an easy task. Each method has its own advantages and disadvantages, and the ideal mix depends on various factors such as the publisher's goals, audience, inventory, resources, and partners. Generally speaking, it is recommended to use header bidding as the primary method for maximizing revenue and transparency while being aware of its potential impact on page load speed, user experience, and ad quality. Waterfall can be used as a backup for filling any remaining ad inventory that header bidding does not cover; however, one should be careful not to create too many tiers or loops that can increase latency and inefficiency. Direct deals and private marketplaces can be used to secure premium and guaranteed ad revenue from trusted and high-value advertisers; however, they should not be relied upon too heavily or at the expense of header bidding or waterfall performance. Experimentation with different combinations and configurations of methods is encouraged in order to find the optimal balance for a specific situation. Monitoring and analyzing the results is essential in this process.

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How do you balance the trade-off between header bidding and direct deals or private marketplaces?

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1 What is header bidding?

2 What is waterfall?

3 What are direct deals and private marketplaces?

4 How to balance the trade-off?

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