For every publisher, maximizing ad revenue while providing their audience with relevant ads matters the most.
But the challenge of doing so is often met with roadblocks. Inefficiencies such as unsold impressions, low CPMs (cost per thousand impressions), and limited insight into how inventory can leave significant revenue on the table, make it harder to optimize revenue.
The root of the problem often lies in the monetization strategy. Are you using an approach that maximizes competition for your ad space? Or are you relying on outdated methods that no longer meet the demands of today’s programmatic landscape?
Two predominant strategies often take center stage in this conversation: header bidding and the waterfall method. Before choosing the right method for your business, it’s crucial to understand the difference between the two and to understand what works best for you.
What is header bidding?
Header bidding is an advanced programmatic advertising technique that allows multiple ad exchanges to bid for ad space simultaneously.
By doing so, publishers can maximize competition, ensuring they receive the highest possible price for their ad inventory.
At its core, header bidding works through a Javascript wrapper placed in a web page’s header. When a user loads a page, the wrapper sends requests to various demand partners concurrently. This simultaneous bidding creates a competitive environment: Each partner submits a bid, and the highest one wins the ad placement.
By allowing multiple demand sources to participate at once, header bidding minimizes latency issues and increases fill rates, ultimately enhancing the user experience while maximizing revenue opportunities for publishers.
What is waterfall bidding?
Waterfall bidding, also known as daisy-chaining, is considered a legacy approach that was once the standard in ad serving.
This method, which prioritizes efficiency over speed, was effective at maximizing publisher fill rates when advanced targeting tools weren’t available. Publishers can set the order of demand partners and define a price floor – the minimum acceptable bid for each ad slot.
The ad impression is offered to each partner in sequence, and once a partner meets or exceeds the price floor, the impression is sold, locking in the highest possible value at that moment.
Header vs Waterfall Bidding
| Aspect | Header Bidding | Waterfall Bidding |
|---|---|---|
| Operational Mechanics | Simultaneous auctions from multiple demand partners | Sequential bidding, with partners in a fixed order |
| Speed & Flexibility | Real-time adjustments, reducing latency | Fixed order limits flexibility and speed |
| Revenue Potential | Typically yields higher revenue with real-time bidding | Often results in lower fill rates and revenue potential |
| Transparency | Offers more insights into bidding performance | Lacks transparency in bidding process |
| Performance Control | Higher CPMs through competition-driven real-time bidding | Impressions sold at the fixed CPM price floor |