Header bidding or waterfall – how it works and what is better?

Header bidding or waterfall – how it works and what is better?

As you probably know, waterfalling – programmatic model – has a new competitor. It’s a Header Bidding. In short, it’s a new way to monetize your inventory by allowing you to integrate with multiple programmatic companies. Some of the market experts claim that it’s a smarter way for making money from your website. Is it true or it is just another marketing trick?

How big you are?

There is something you need to know at the beginning of your adventure with this two models. Or we can say that it’s a question that you have to ask yourself – how big you (your company) are? It’s essential question because of the fact that Header Bidding is not for everyone. It’s rather dedicated to huge companies. If you are a small size business, we recommend you to think more about Google AdSense, ADX, cooperation with web or YieldRiser. The similar situation refers to the medium size companies that should rather outsource their header bidding or waterfalling strategy.

What is the main difference between these techniques?

Waterfalling enables publishers to move their inventory from one market to the next to optimize for revenue. But it’s a tactic that has remained stubbornly difficult to implement at times, despite all the promises of efficiency that are often attached to automated selling.
To compare, Header bidding (also known as “pre-bid integration”) is an inventory management strategy that allows the ad server to understand the value of inventory impression by impression instead of simply using an average.

How waterfalling works?

Traditional waterfalling model is set up from the highest to the lowest CPM.
Try to imagine that SSP1 is selling “X” website and its CPM is starting from 10 PLN. At the end of this process 10% of all of the ad impressions has been sold. These unsold ad impressions are going to the next SSP2 and it is also starting the selling but now the cost is from 8 PLN. At the end of this process the score is 15% website traffic sold. The same situation is referring to the last SSP3 but for now it’s getting started from 2PLN. Now everything has been sold.

How header bidding works?

The shortest way to explain this techniques is – bidding. In practice – the SSP with the highest CPM wins the bidding. So when we link a few numbers of SSP with header bidding, we probably expect their active sales (because of a little bit different DSP or reading desk). When it comes true we can be sure that it will grow the effective CPM for all of our website. Another important thing is holistic yield management – a part of Google DFP and other adservers eg SMART – that can bring us more benefits from our advertising space.

As you can see the question what is better – header bidding or waterfalling strategy – is not so simple. Please consider: kind and size of the website, source of the website traffic, division between mobile and desktop traffic.

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