Header bidding, the solution allowing different advertising buyers to simultaneously bid for the same impression on a publisher’s site at the exact same instant, has become a beacon of hope for an industry still grappling with the economics of the internet era, says Nigel Gilbert, VP strategic development, EMEA at AppNexus (pictured below). In this piece, he identifies three key things of which publishers need to be aware.

Originally brought to market in 2009 by AppNexus, header bidding started to gain momentum among publishers last year and looks set to continue to be one of the most talked about and widely used solutions in 2016.

A number of prominent publishers have already witnessed significant revenue uplift, thanks to header bidding’s adoption, and have been quite vocal about the results achieved.

Recently, Danny Khatib, president & COO, Livingly Media, one of the earliest adopters of AppNexus’ solution, said that he was “impressed with the phenomenal revenue growth fueled by header bidding with AppNexus, without having to sacrifice ownership of our inventory”.

By gaining control over the supply and demand process, this solution fosters true competition and secures better yield for publishers.

However, despite growing adoption and proven financial results, header bidding has raised doubts among some in the industry, with the fiercest critics citing increased latency and risk of data leakage as some of the most important issues.

With the ever-increasing buzz surrounding header bidding, it’s important to separate signal versus noise. Here are the three key things every publisher should know:

1. Header bidding really does add value

At this point, there is clear evidence that publishers that have implemented header bidding tend to make more money. For example, Livingly Media earned an impressive 10% incremental revenue growth following the implementation of AppNexus’ header bidding solution.

So, where is this money coming from? And, more importantly, is it sustainable?

We believe there are three fundamental reasons why header bidding creates value:

First, header bidding removes any risk of bias in the allocation of a publisher’s inventory. The vast majority of publishers rely on Google’s ad serving technology, DoubleClick for Publishers, to manage their ad inventory. Google also happens to run the world’s largest ad network, AdX, creating an inherent conflict of interest.

How can a publisher trust Google to allocate ad impressions fairly between their ad network and demand from other buyers? Would you trust Sotheby’s to auction your possessions if they would not tell you how they selected the winner of an auction and would not disclose how much each participant bid in the auction?

Header bidding gives publishers a way to keep Google in check. By running an auction outside of DFP in their own headers, publishers can ensure a fair auction without the risk of bias towards Google’s own network.

Second, by enabling publishers to enjoy direct access to all demand sources equally, header bidding expands demand and, therefore, reduces reliance on Google’s AdX and potentially the cut taken by intermediaries, resulting in more dollars going directly to publishers.

Lastly, header bidding provides maximum access to demand for publishers. Ad buyers may target a publisher’s inventory differently based on how and where that inventory is sold. Buyers often prefer to buy through supply sources where they have the highest cookie match rate. Header bidding greatly increases the chances of a match with a buyer’s cookie, thus increasing the likelihood that a buyer will bid on a publisher’s inventory.

2. Proper implementation is key

The implementation of header bidding involves the insertion of a special JavaScript snippet into the publisher’s site, which some publishers legitimately fear may result in increased latency.

However, experience has taught us that if publishers choose the right code and implement it efficiently, latency ceases to be an issue. Publishers need to be particularly attentive to whether their header bidding solution initiates a synchronous or asynchronous auction, and determine whether integration has been managed correctly. If executed properly, publishers can boost revenues without compromising user experience.

Some publishers also worry about data leakage. But header bidding is no riskier in this regard than any other exchange-driven auction. To safeguard their data, it’s extremely important that publishers know their partners and have an in-depth understanding of their practices and policies.

3.  Beware of bias

The true purpose of header bidding is to sustain a transparent and open ecosystem for online advertising; which is why it should be open-source and free. Today, there are multiple public domain header-bidding wrappers available, including prebid.js, which AppNexus and its partners designed.

Publishers, meanwhile, should be aware of companies trying to sell their proprietary header bidding code. Some vendors may bias their own demand channels, thus obviating the entire purpose of header bidding.

Header bidding certainly isn’t a piece of cake, and its implementation may be daunting. So, technology partners able to provide an excellent customer service, where implementation is totally taken care of, would be extremely valuable for publishers lacking technical proficiency.

Ultimately, header bidding provides publishers, competing in a highly fragmented digital media landscape for their survival, with an exceptionally beneficial alternative to the closed and opaque auction ecosystem of DFP, as it offers publishers greater control of every impression sold to direct, RTB and network demand sources – giving them the freedom to see the true market value of their inventory and obtain the best price for it.