By Roman Vrublivskyi
In the programmatic buying ecosystem, the header bidding and RTB (real-time bidding) terms are often confused with one another. However, even though RTB and header bidding share some similarities, such as automating the media buying process, they are not the same. But what are the differences? What are the benefits of these approaches for publishers and advertisers? Our guide is here to answer these questions, and not only.
What is Header Bidding?
Enabled through the JavaScript library, the header bidding technology interacts with multiple demand-side platforms and ad exchanges concurrently, creating a unified auction for advertisers. Thus, instead of waiting for their turn (like it happens in the waterfall model), all marketers get equal opportunities to access high-quality inventory (and any other inventory as well), which ensures fairer conditions for them. In turn, publishers benefit from increased demand and higher fill rates and drive income more effectively.
What is RTB?
Real-time bidding is a form of programmatic buying and, basically, it has become the basis for the emergence of header bidding technology. It usually works like this: an impression opportunity arises, and advertisers start competing for the inventory via a real-time auction. If that’s the first-price auction, the highest bid wins, and the amount placed is paid. In the case of the second-price auction, the highest bid still gets the inventory, but the winner pays 1 cent more than the second-highest bid.
RTB seems effective, but it lacks transparency and equality since marketers bid one by one. Therefore, it may be challenging for some of them to access top ad space.
RTB vs Header Bidding: Which is Better for WL Ad Exchanges?
Getting a white-label ad exchange allows for entering the programmatic environment and starting earning on media trading quickly. However, to drive revenue effectively, owners of ad exchanges need to understand the requirements of their supply and demand partners. So, if choosing between real-time bidding and header bidding, what is better for them?
To help you make a decision, we have prepared a sufficient comparison outlining the key differences between RTB and header bidding.
Header Bidding vs Real-Time Bidding | ||
Header Bidding | RTB | |
|---|---|---|
What is it? | Header bidding is a subset of real-time bidding. | RTB is a subset of programmatic buying. |
How does the auction take place? | The auction is unified, with numerous DSPs and exchanges competing for an impression at the same time. | The auction is successive, with every platform performing it one at a time. |
How are the bids placed? | All the auction participants place bids simultaneously, which ensures equal and fair conditions for advertisers, as well as better transparency. | In the RTB waterfall model, the impression is first offered to the top-tier auction participants, then to the next tier, etc. |
What income do publishers get? | Publishers get higher revenue since they can sell their inventory at its real value and benefit from increased competition. | Trying to monetize the ad space, publishers often get lower income, especially during the second-price auctions. |
What inventory can advertisers buy? | Advertisers can access ad inventory of any quality, including premium ad space. Additionally, it is easier for them to reach niche audiences. | Marketers can purchase only the inventory that reaches their tier. |
Can there be latency? | Reduced latency due to simultaneous bidding. | Increased latency since the bidding process is sequential. |
Is there a chance for manipulation? | Header bidding utilizes open-source infrastructure (like Prebid.js), which helps to prevent manipulation. | RTB auctions may be prone to manipulation as the participants are not aware of each other’s bids. |
So, real-time bidding vs header bidding. Who is the winner? Considering the comparison described above, the header bidding approach may seem to be more beneficial for both publishers and advertisers. It ensures transparency and creates equal conditions for all the bidders participating in the auction while also helping publishers drive revenue. Therefore, choosing a white-label ad exchange solution supporting header bidding may seem an obvious step.
However, you should remember that an effective marketplace implies flexibility. Instead of searching for a solution that offers exclusively header bidding, consider preferring one that supports different auction models.
RTB seems to be less effective for both parties involved, but it can still be useful for selling the remaining ad inventory. Besides, RTB is not only about first- and second-price auctions. Private marketplaces (PMPs) also fall under this term — only limited groups of marketers take part in such auctions, and publishers tend to use them to monetize their top ad inventory.
This way, some website and app owners can still benefit from the RTB approach, so you should offer multiple programmatic buying models to your demand and supply partners. Thanks to this, you will have more opportunities to monetize your ad exchange. Additionally, it would be wise to prefer a solution that is regularly updated. The programmatic industry is still evolving, so new buying models may enter the stage, and it is essential for you to be sure that your platform will start supporting them and remain competitive.
Build Your Own Ad Exchange Brand with Our Expertise
So far, in the “battle” of real-time bidding vs header bidding, the latter model is the winner since it solved the inefficiencies of RTB. However, having both of them on your ad exchange is still a way to attract more partners and ensure stable media trading income. But how to integrate these models into your solution?
Creating an ad exchange from scratch and keeping it competitive is a challenging and time-consuming process. Therefore, instead of investing loads of resources into development, you may prefer another approach — for instance, choosing one of the Attekmi programmatic solutions.
Both header bidding and OpenRTB 2.6 are on the list of supported integrations. Besides, there are also some pretty unique options like VAST to RTB, which enables cross-integration and additional income opportunities for you.
Additionally, there are many more benefits like fraud detection scanners that you can integrate for your supply and demand partners, multiple traffic types and ad formats available, various targeting types for matching supply and demand side effectively, and so on.
Choosing Attekmi is a way to enter the programmatic industry promptly, achieve payback quickly, and start driving income. For instance, StreamKey achieved payback within 2 months and doubled its revenue after deploying our solution.
Conclusions
Even though RTB revolutionized the advertising industry at the time, it is still not perfect. Header bidding emerged as a solution to its challenges, so we can consider it an obvious winner. However, this does not mean that ad exchange owners should integrate only header bidding capabilities into their platforms. RTB can still be helpful in certain cases, and it is also important to provide demand and supply partners with some flexibility. In general, the more options you offer, the better, but header bidding must definitely be on the list.
Keep in mind that getting a white-label ad exchange is a much faster way to enter the programmatic environment than building such a platform on your own. Prefer the solution that supports multiple programmatic buying models, including header bidding.
Does Attekmi look like a reliable partner to you? Then let’s get in touch!
FAQ
What is the key difference between header bidding and real-time bidding?
The main difference between header bidding and RTB is that header bidding auctions are unified, with multiple platforms competing for an impression at once. This creates more equal conditions for marketers. In turn, RTB auctions are successive, with a single platform performing at a time. Impressions are first offered to top-tier marketers, then to the second-tier, etc.
Header bidding vs real-time bidding. What is better?
Header bidding enables better transparency and solves the challenges of RTB. It is more beneficial for both advertisers and publishers. However, owners of ad exchanges should still have both header bidding and RTB on their platforms to provide their partners with more opportunities.
Header bidding vs open bidding. What is the difference?
Open bidding is a programmatic technique created by Google as an alternative to header bidding. It also enables multiple demand sources to bid simultaneously, but the auctions take place within the Google Ad Manager ad server. All the payments are also managed by Google.