One year on: How header bidding drives record revenues for swedish media company Mittmedia
One year ago, swedish local media company Mittmedia launched its header bidding solution as a vital component of the strategy to rejuvenate digital ad business by making the ad inventory accessible to more programmatic buyers. Today, the has proven successful and is bringing in fast growing revenues every month, in the millons. We took some time to speak to Håkan Hamrin, Mittmedia’s head of programmatic and ad tech, on header bidding and how Mittmedia makes money from it. Also on how the solution enables Mittmedia to continue increasing programmatic revenues incomes in the future — with minimum effort.
Before we go into details on header bidding, let’s take a step back to look at Mittmedias overall digital advertising strategy.
Mittmedia stepped into the traditional ”non-relationship-based” banner ad business some years ago. Like the rest of the media industry, Mittmedia hoped that that business would keep the company going in the future. But by 2016 Mittmedia realised that the banner business was going into stagnation. The main reason was, and still is, the competition from Google and Facebook who took, and are more then ever taking, more and more of the digital ad market with volume and effective target audience offerings to customers.
The impacts in the media business has been more or less disastrous.
Media companies all over the world are being exposed to a downward pressure in the digital ad business. Large media companies like Buzzfeed, Vox, CNN and Vice are experiencing a slump in digital revenue and consequently reacting with cost cuts, like layoffs and in some cases even postponing IPO:s. The structural pressure will get even worse in 2018 and 2019.
The early insights into this structural shift i business made Mittmedia reset their digital ad business strategy in fundamental areas in order to run a successful ad business despite the pressure.
Important parts of the new strategy were to increase accessibility to the ad inventory in the programmatic part of ad sales and increase advertising effect by offering ad customers a new model based on audience targeting.
To understand more about how Mittmedia works with accessibility, customer effectivity and ad inventory, we turned to Håkan Hamrin, Mittmedia’s head of programmatic and ad tech, for more information.
Håkan, can you tell us how Mittmedias is working on increased ad effectivity, accessibility and optimization of its inventory?
– At Mittmedia, we work towards a higher effectivity and accessibility in many different ways.
– When it comes to local sales, it’s all about offering our customers a new, effective business model. We’re going from offering traditional and blunt banner advertising, like we used to, into offering the same kind of effective audience targeting advertising that Facebook and Google are competing with.
– Nowadays, we´re only selling ads based on what target audiences our ads actually reaches , not where on a web site or in an app the ad is shown.
– All of the Mittmedia salesforce is offering this new target audience logic to their customers, every day. They´re doing it by way of the high class sales tool Reacher. And it is highly effective for the customers and for Mittmedia. We can see how local ad revenues are rising dramatically, both when it comes to CPM levels and total revenue.
– The other part of optimizing our ad revenues is about increasing accessibility of all of our ad inventory traded in the programmatic trade each day.
Okay, can you tell us more about why it’s so important to work with accessibility of programmatic ad inventory?
– Fundamentally, it’s about our inventory volume and its limitations. Mittmedia has an inventory of over 100 million ads served per month. This may sound like a lot, but it’s in fact a limited inventory that we need to manage wisely and always optimize. An ad inventory is a perishable. At every given moment we need to take advantage of the potential value in each ad serving by making the inventory organically accessible the maximum amount of buyers. If we can do this, we can also maximize prices and profits.
And how are we working on improving accessibility of our ad inventory?
– First, we need to decide that all our ad servings, even those sold manually, must be sold programmatically. We’ve seen that it isn’t always the manually sold ads that bring in the best incomes. For this reason we’ve chosen to expose all our servings to programmatical competition and sell to the buyer who pays the most.
– The next step is to ensure that the ad serving is shown to as many buyers as possible. This is where the header bidding solution does it´s most important job.
Now I understand a bit about why. But it still sounds a bit complicated. If you would explain to me, a non-ad-expert, is it possible to simplify even more?
– Okay, to explain this in a good way, we can start of with a metaphor. Imagine you are selling a table at an auction. You’re hoping for £40. When the auction finally takes place, there are two people in the audience. One of them is prepared to pay £20 and the other £20.50. The bidding starts but you would probably never get more than abut £20.50.
– Now imagine that there are 50 people in the audience. Ten of them are interested in the table. Several of them are prepared to pay over £50. When the bidding begins, the price rises rapidly. The final price is £70, a price you are more than happy with.
– With the help of header bidding we´re making sure that the ad servings we sell are shown to a maximum number of bidders. We´re simply increasing the amount of ”people in the audience’” at programmatic ad auctions.
Great, thanks for the explanation. What is the tech set up here?
We have two so-called ”wrappers” that send every ad serving to different instances, who then send it on to a lot of different bidders.
– One wrapper is on the client side (i.e. our sites) and sends a call to five different SSP’s (an SSP is the technical platform Mittmedia uses to be able to offer our ads for sale, ed. note). The other wrapper is located serverside. Since it’s serverside, it can manage a lot more calls from SSP’s without our sites/web browser performance being slowed down.
– This way we can connect more and more players and reach many more bidders. This also means that we can connect DSP’s directly to our header bidding which improves our performance and increases the number of calls they reply to. When we built our solution, we chose to cooperate with the Swedish company, Livewrapped, and the collaboration has been both rewarding and flexible.
And if the purpose is to increase accessibility, optimize the inventory and push up prices, how is it going for us?
– Our revenue development has been fantastic in terms of both total income from header bidding and in terms of income per ad serving (eCPM). In one of our SSP’s we’ve gone from an eCPM of just over 20 at the start of the year to over 60 now in June. We see revenues going up in all instances of our header bidding. A positive development in all instances gives a good figure for the total, of course.
This sounds amazing. What does the total income look like?
– Last autumn we were happy if we reached one million swedish kronor (£85,000) per month via header bidding. We’re currently far over a million kronor per month in both May and June.
– Also, the summer has been very good programmatically for us, to say the least. This is money ticking in 24/7.
That sounds truly great. One last question. At the start of this blog post, we promised to explain how Mittmedia uses this solution to continue increasing accessibility and growing income levels for our ad servings with a minimal effort. That sounds almost too good to be true. Please explain.
– Yes, it does seem to good to be true. But the fact is, it is. When the basic set-up structure is in place, it’s relatively easy to add new players. For example, we added an SSP called Appnexus in March. In April, we earned over £25,000 just from them, in May almost £38,000 just from Appnexus.
– We have several SSP players coming in. Eventually, we will of course reach a level where a new player doesn’t make a difference to the total. But for now we are looking at a total increase as soon as we add a new SSP to our header bidding.
Great, thanks a lot for your answers, Håkan. We’ll keep our fingers crossed that things continue like this. We’ll surely have more reasons to get back on header bidding and ad tech in the future.
– Thank you!
Thomas Sundgren, Head of platforms and strategic partnerships, (thomas.sundgren@mittmedia.se)
Håkan Hamrin, Head of programmatic and ad tech, (hakan.hamrin@mittmedia.se)
Mittmedias lösning för header bidding has been developed by Livewrapped, https://livewrapped.com
