To understand “in-app header bidding”, you first need to understand its origins.
The term “header bidding” comes from the world of web advertising, wherein multiple demand sources are called from a web page’s header to bid on individual ad impressions simultaneously. This allows publishers to maximize revenue by prioritizing the highest paying options. Before header bidding, ads were served using the waterfall model which relied on historical performance data and direct relationships. Recent technical developments have allowed the mobile app industry to start experimenting with similar models which is how the term“in-app header bidding” was coined — though it’s not the most accurate way to refer to what is essentially a more flat, unified approach to programmatic ad mediation.
What is in-app header bidding?
The term “in-app header bidding” refers to the practice of running auctions for mobile in-app ad impressions between multiple demand sources the same way that web publishers historically have for their websites. The term is a bit of a misnomer, however, as there isn’t really a “header” in mobile applications. The auction typically takes place in the background of the app whenever users start a session, though when exactly the auction takes place is up to the developer. Most importantly, these auctions represent a departure from the traditional in-app advertising waterfall method which has been the de facto choice for mobile monetization experts for the last decade.
In the waterfall method, publishers would rely on historical performance data from demand sources to prioritize which gets the impression. They allocated their inventory from source to source, cascading down the waterfall, until all addressable impressions were fulfilled. The problem with this kind of daisy-chaining, however, is that only one network at a time is ever given the opportunity to address the impression, making the process less competitive. As a result, higher paying opportunities can be missed, and publishers make less money. An auction-based model, facilitated by a programmatic mediation solution, solves this problem by opening up every ad impression to multiple demand sources and giving them the opportunity to bid on them. In this way, programmatic mediation offers an arguably fairer approach to monetization that benefits the publisher.
What are the potential benefits for mobile publishers and advertisers?
In-app header bidding (or programmatic mediation) models introduce a number of powerful efficiencies for mobile app publishers and the advertisers they do business with:
- It increases publisher revenue: The auction process lets publishers realize more high-paying opportunities and increase overall ad revenue — sometimes 30% to 60% more than waterfalls.
- It offers premium inventory to advertisers: In a waterfall, advertisers rarely get first bid on an impression unless they have a direct deal with the publisher. Header bidding brings all demand sources to the front of the line to bid on premium inventory, allowing them to connect with more of their ideal audience.
- It increases the value of unsold inventory: Premium inventory being sold early on introduces greater scarcity into the remaining inventory, which drives up value — another boon to publishers.
As innovative as “in-app header bidding” might seem, things are only just getting started. We’re already seeing industry-leaders refine the process further. Bundled solutions like Tapdaq give publishers even more control over how their ad inventory is sold by introducing powerful pricing thresholds and the ability to combine both waterfall and auction approaches with minimal impact towards an app’s maximum method count. It also facilitates bids from SDK-based ad networks alongside other programmatic demand sources so that publishers can reap even greater benefits by leveraging powerful ad formats like playables that typically require an integrated SDK.
Programmatic mediation can be a hard concept to wrap your head around if you’re not fully immersed in the world of online advertising, but a good ad partner can help. For more information on in-app header bidding, programmatic mediation, and all things mobile, the experts at Tapjoy are ready to help.
Want to learn more about mobile app monetization? Check out “What is ARPPU?” to learn why many mobile monetizers consider it a top priority metric across their app portfolios.