Header bidding and Real-time Bidding (RTB) have shaken up the digital advertising industry. Both advertisers and publishers are hailing these methods as the most significant development in ad tech so far.
When it comes down to their core features, header bidding and RTB can look very similar. In this article, we will list their differences and understand why these two methods are preferred over other bidding techniques.
What is Header Bidding?
Header Bidding is an advanced programmatic advertising technique and an alternative to the traditional “waterfall” technique.
Header Bidding allows multiple demand partners to bid on the same ad inventory. This creates more competition, enabling publishers to sell their inventory for the highest price possible.
Header bidding wrappers manage this process.
Why Opt for Header Bidding Over Other Bidding Techniques?
The introduction of in-app header bidding solved many inefficiencies in other bidding techniques.
Previously, the bidders were arranged in a waterfall sequence, and the bid requests from the advertisers were not simultaneous. Hence, the publisher had to rank the advertisers based on historical data.
Thus, allowing the top advertiser to bid first, followed by the other advertisers. In this case, ad inventory is often won by the advertiser first in line and not by the one who bid the highest.
For Example: Say the publisher has a floor price of $3. The bidding request goes to the first buyer who bids for 2$. The floor price is not met; hence the bid request goes to the second buyer, who bids for $4, and the buyer wins the impression.
However, due to the waterfall bidding technique, the third buyer could have been ready to bid for $7 but did not get the opportunity to bid.
Header bidding solved this problem! Instead of sending the bid request sequentially, publishers could now send bid requests to multiple buyers simultaneously.
Due to the change in the process, the buyer with the highest bid won the impression, and publishers got the revenue they deserved.
What is Real-time Bidding?
Real-time bidding is a subset of programmatic media buying. Real-time bidding is a mechanism for buying and selling ad impressions through auctions.
Real-time bidding also referred to as RTB, lets both publishers and advertisers set parameters such as minimum prices and maximum bids and prioritize specific deals or inventory.
Like header bidding, RTB allows multiple demand partners to bid on the ad impressions, and the winning bidder is chosen through auctions. The demand partner with the highest bid wins.
Before the introduction of RTB, online advertising was neither targeted nor easy. During the initial days, the contact between advertisers and publishers was direct.
The process soon became practically impossible with the increase in advertisers and publishers. A large part of the publisher’s inventory went unsold.
Ad networks helped solve this issue to some extent by purchasing the unsold (remnant) inventories from multiple publishers in bulk and selling them to advertisers. However, advertisers and publishers had to work with multiple ad networks, and the process became cumbersome.
After the advent of the bidding system, publishers could sell their entire inventory, and advertisers could buy a more targeted inventory. Let us discuss with an example to understand how RTB works:
Example: An ad impression is generated when a user visits an app. This moment is gold for publishers and advertisers as it allows them to make a sale.
Publishers send out ad requests to advertisers through multiple ad networks for that impression. The bidding process happens in real-time, similar to auctions. The winner would be the bidder with the highest bid.
Header Bidding vs RTB
RTB is a subset of Programmatic Advertising, and Header bidding is a subset of RTB. Both bidding techniques have improved certain inefficiencies in other media buying techniques.
Just like real-time bidding brought improvements to programmatic buying, header bidding was an improvement to RTB. Let us now understand the differences between Header Bidding and RTB.
Header Bidding is a part of Real-time Bidding.
Real-time Bidding is a part of Programmatic buying in ad exchanges.
Solved the inefficiencies of waterfall and real-time bidding techniques.
Solved the inefficiencies of managing multiple ad networks for both advertisers and publishers.
Can even sell Premium inventory at higher rates.
Ideal for Remnant inventory of a publisher.
Bidding is simultaneous and bidders need not wait for their turn
Bidding is sequential(In waterfall) and bidders need to wait for their turn
The latency in ad serving decreased once simultaneous bidding started.
The latency in serving ads is higher if the bidding is sequential.
Increased revenue for app publishers with better targeting for media buyers.
Provides better targeting alone.
Higher revenue for publishers.
Comparatively lower revenue for publishers if used in waterfall bidding.
The Bottom Line
Header bidding is just one of the ways the ad inventory can be sold through RTB. Undoubtedly, the Header bidding technique has taken over the adtech world.
On the other hand, RTB provides better targeting and includes header bidding, waterfall, Google’s open bidding, private auction, preferred deal, programmatic guaranteed, and more.
If you are an app publisher looking for header bidding or any other RTB implementation, feel free to contact AppBroda experts!
We help publishers to monetize better without hampering the user experience. We explore app monetization strategies and bidding methods to analyze what suits you the best!
What are you waiting for? Set up a free demo today!
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