Header bidding is an advanced programmatic advertising technique that allows publishers to offer their ad inventory to multiple demand partners (advertisers) simultaneously before making ad requests to their ad server, such as Google's DoubleClick for Publishers (DFP). This process increases competition for ad space, leading to higher revenue for publishers and more efficient ad placements for advertisers.
Here's a step-by-step explanation of how header bidding works:
Setup: The publisher installs a header bidding wrapper, which is a piece of JavaScript code, on their website or app. This wrapper is responsible for managing the header bidding process and communicates with different demand partners or ad exchanges.
Ad inventory: The publisher defines the ad inventory (ad units and ad placements) they want to offer for header bidding.
Bid request: When a user visits the publisher's website or app, the header bidding wrapper sends bid requests to multiple demand partners, along with information about the ad inventory and user (such as device type, location, and browsing behavior).
Bid response: Demand partners review the bid requests and decide if they want to bid on the ad inventory. If they do, they return a bid response, which includes the bid price and the creative (the actual ad content).
Auction: The header bidding wrapper collects all bid responses and conducts an auction to determine the highest bidder for each ad unit.
Ad server request: After the auction, the header bidding wrapper sends the winning bids to the publisher's ad server. The ad server compares the winning bids from the header bidding process with other demand sources, like direct deals and ad networks, to determine the final winning bid for each ad unit.
Ad rendering: The ad server returns the creative for the final winning bid to the publisher's website or app. The ad is then displayed to the user.
By allowing multiple demand partners to compete for ad inventory, header bidding helps publishers maximize their ad revenue and ensures advertisers have access to premium ad placements, often resulting in more relevant and engaging ads for users.