While header bidding was designed to combat the waterfall effect, some issues remain. While all demand is competing simultaneously, ad servers can be grouped into different tiers based on reliability, expected diminishing yield, and business priorities. Also, changing ad servers is an expensive and inconvenient task and some advertisers may not be able to switch in the near future. As a result, some advertising platforms may be better served by combining header bidding with a single ad server.
Server-side header bidding
In order to be effective, header bidding must be implemented server-side. Browsers typically have limited outgoing connections, which limits the number of connections a publisher can make to multiple partners. This can cause inefficient header-bidding auctions as the publisher connects to multiple partners at the same time, resulting in duplicate bid processing. Additionally, it takes time and effort to implement and manage browser compatibility issues. But, as the number of partners increases, server-side header bidding can help publishers get the best ROI.
The advantages of server-side header bidding are many. It can significantly boost digital ad revenue. Header bidding is one of the most popular ways to monetize online properties. Despite its disadvantages, this method has already become a standard in the industry. And it has only been around for two years. According to Hamrin, more than 70% of publishers have adopted the practice. But, is server-side header bidding better?
Increased infrastructure costs
A recent study showed that header bidding increases infrastructure costs by up to 250%. This is due in large part to the increased number of calls made to DSPs and exchanges by advertisers and publishers. These companies must invest in additional servers to handle the increased traffic. As a result, header bidding can result in doubled impressions for publishers and DSPs. This in turn results in little or no revenue.
Despite the advantages, header bidding has its drawbacks as well. It requires additional technical expertise and requires a dedicated team to manage and monitor performance. In addition, it is difficult to scale header bidding if it involves the use of many demand partners and ad units. Furthermore, header bidding can increase infrastructure costs, since it requires publishers to install header bidding adapters and SDKs on their websites.
Benefits of first-price header bidding
First-price header bidding allows publishers to gain competitive advantage outside of Google’s ecosystem. It has the potential to increase CPMs by getting the highest bidder for each impression. It allows publishers to set a floor price, such as $1.50 CPM, for their inventory, and monitor the actual value of their inventory. This can help publishers avoid losing money on inventory that they can’t sell.
With this system, multiple ad networks, DSPs, and publishers all compete for the same ad inventory. All bidders have an equal chance of purchasing the ad slot, so the winning bidder will be the one offering the highest CPM. With header bidding, publishers gain access to all available inventory at once, and advertisers know exactly how much their partners are willing to pay for the ad inventory.
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