Understanding The Essentials of In-App Header Bidding

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eMarketer recently revised its 2020 advertising forecasts as a result of coronavirus, but one thing did not change; mobile advertising will account for more than two thirds (68.1%) of the digital total and will suffer the fewest effects from the pandemic. As consumers turn to their phones to watch more content and shop, so do advertisers, creating a major opportunity for app developers to capture more revenue and improve their advertising operations through in-app header bidding.

Programmatic advertising is at the heart of the mobile trend because it’s what brands prefer. In a report that PubMatic recently published in partnership with Forrester research, it was reported that 66% of in-app budgets go to programmatic direct or open exchange strategies as compared to 34% for direct buy. With two-thirds of mobile in-app revenue potential being sent through programmatic pipes, now is an opportune time for publishers to prioritize their programmatic operations on mobile. With modern technical options for programmatic header bidding, technology is no longer the main hindrance to improvement, but rather a lack of knowledge, which 44.3% of publishers reported in the survey. Partners with header bidding experience can help bridge that gap quickly, helping publishers and app-developers create a go-forward plan.  With the right monetization strategies, header bidding setup, and evaluation criteria for partnerships, publishers can maximize their return on mobile in-app investment.

Comparing New and Old Monetization Strategies

Generally, in-app publishers use the same two advertising monetization strategies that are used across programmatic advertising, waterfall, and header bidding. While it is widely used, the waterfall strategy has a few downsides. First, it doesn’t maximize revenue for each individual impression because the SDKs are in a fixed position. Second, as publishers integrate more SDKs, they can end up with more than 20 and suffer from SDK bloat, which causes issues with maintenance of every SDK (increasing the risk for instability/issues) as well as the overall size of the app balloons, and users have limited space on their phone. The process of analyzing and reordering the waterfall creates a lot of manual labor. As a result, many publishers, stuck by a lack of performance data to truly compare different partners, leave their setup as is.

Header bidding strategies are able to solve the issues inherent in the waterfall strategy. While there is not an actual “header” on a mobile app as there is on a web page, the concept is the same. In-app header bidding is a term that really describes a parallel auction, where information is collected from each ad partner and then matched at the same time to an incoming bid. This structure ensures that each ad impression maximizes revenue with no manual labor on the part of the publisher. As the auction is also unified, which consolidates data for better long-term insights.

The benefits of header bidding at a technical level are many. Increased bid density means that a greater portion of impressions is exposed to a buyer, increasing competition. It also increases the fill rate as there is a higher chance of attracting bids for more impressions. It’s easier to run floor-price testing to ensure maximum bid rates. And logistically, header bidding scales more easily as there is little manual work to make adjustments. User experience is also improved as lag times are dramatically reduced when all bids are collected in a unified auction.

For in-app publishers with direct demand, there is even more opportunity to drive increased revenue. The header bidding SDK can be integrated into the primary ad server to create more competition for inventory, effectively increasing revenue. And for publishers with no primary ad server, they can set up their header bidding SDK as the first rung on their waterfall, allowing it to decision and serve the winning bid. This setup allows publishers to reduce latency by taking advantage of cloud-side auctioning and provides the ability to identify and eliminate low performing ad networks.

Finding the Right Partners 

Creating a healthy header bidding strategy requires that in-app publishers have the right environment to enable the technology. The main categories that require new resources to launch and manage header bidding are initial deployment, ongoing maintenance, revenue optimization, and reporting. Publishers can choose from a few different directions in their journey:

  1. Building With Open Source
  2. Choosing A Partner Built On Open Source
  3. Choosing A Partner Who Has A Proprietary Header Bidding Solution

The primary variable in deciding which way to go requires a realistic assessment of available resources internally. For app publishers with a primary focus on advertising and good technical resources internally, it’s possible to create and maintain a robust advertising environment in-house. By building on open source, especially with Prebid.org code as the foundation of their set-up, publishers can keep up to date, test new partners, and expand as the market evolves.

For publishers with fewer technical resources to dedicate to advertising technology, it’s important to consider the same criteria when evaluating partners. Namely, partners should have resources available to make adjustments and expansion. They should be built on open-source code such as Prebid.org in order to maximize compatibility and verification in the market, and they must offer flexibility to grow and evolve over time. For example, solutions that support the IABs Open Measurement SDK to facilitate support of third party verification and help with reporting.

Header bidding offers a significant improvement over waterfall setups and gives in-app publishers eliminating problems that have caused anguish in the fast-growing channel. Partner or in-house, the best header bidding strategy supports an open, flexible environment that makes it easy to add and test partners, maximize demand, and optimize the performance of each impression without significant manual labor in the process.

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