The Secret War Against Google
It all started with the banner ad “You will” on 27th of October 1997. After which were the days when advertisers directly bought inventories from publishers.
As publishers grew, there were millions of unsold ad spaces. Ad networks came into picture who bought these unsold ad spaces, packaged them and sold it to advertisers. The problem arised when the number of ad networks grew. It was hard for advertiser to find out whom to buy from. Sometimes they bought the same audiences again.
This was when ad exchange was born. Instead of selling inventories they sold audiences. Publishers made their audience available on ad exchange and the advertisers bid on them.(These bid happens programatically based on algorithms that can give best results to advertisers). The winner made the impression.
In the massive set of audiences finding out whom to bid became important. This is when advertisers integrated themselves with Demand Side Platforms(DSP) to buy relevant audience based on data. On the other side publishers integrated with Supply Side Platforms (SSP) to optimise their selling point. Oh wait, what about Ad Networks? They started to buy and sell on ad exchanges.
Most publishers used DFP(DoubleClick for Publishers) from Google to sell their inventories. DFP made it easier for publishers to sell their inventories across multiple Ad Networks based on bids or even buy directly from advertisers and provided a way to maximise revenue.However, DFP only allowed bids from Google AdExchange and AdX. The process of bidding here was a black box to publishers. In other words they were not in control.
The other problem was google had an advantage because of it’s tight integration with DFP. Say you had a 720 x 90 banner ad on your website. Three ad networks AppNexus, OpenX and Pubmatic are interested. AppNexus bid $1.80, OpenX $0.70 and Pubmatic $0.5.
Publisher can set price estimates for these Ad Networks. If it doesn’t cross this estimate the bid , it will be rejected and passed on to the next bidder. Assume the price estimate you set are AppNexus $1.90, OpenX $0.65 and Pubmatic $0.5.
Since the estimate amount you set for AppNexus is $1.90, which is higher than what they bid ($1.80) , Their bid is rejected. It is now passed on to OpenX. They are ready to pay more than what you asked for. They can win the bid. However, google comes in between , they pay a penny more ($0.66) and win the bid. The publisher has lost ($1.80 — $0.66) $1.44 on one CPM (Cost Per Impression). This is a huge loss for the publisher and unfair for the Ad Networks. This is why Header Bidding was introduced.
Header Bidding
When a user visits a website , information such as location, device type, cookies are send to the bidders or Ad Networks. Ad Networks analyse these data and revert back with their bids. If you consider the previous scenario , AppNexus $1.80, OpenX $0.70 and Pubmatic $0.5. Here AppNexus wins the bid at $1.80 instead of $0.66. Incase google want to buy the impression, they have to bid $1.81 (Sorry Google!). Hence more money for the publisher. This entire process of bidding happens in the user’s web browser (Like Google Chrome). This is hence transparent. Any user can go to the browser’s console and type a few commands to see who bid what for your impression. Header Bidding helped publishers increase their revenue by 50% to 70%.
Setting up Header Bidding
AppNexus open sourced Prebid in early 2015. It is an open source tool which publishers can use to implement header bidding. In the coming days I will write more stories to help you set up header bidding. Make sure you follow this publication and me(Febin John James). If you don’t want to go through the headache of setting up of header bidding on your own. I can introduce you to a team, who can do it for you. Just connect with me on LinkedIn.
