LONDON: Header bidding has solved many problems in the programmatic buying process but its very success has thrown up new ones, according to an industry figure.

In a WARC Best Practice paper, How to use header bidding, James Prudhomme, Index Exchange’s Managing Director of EMEA, charts the rapid evolution of the programmatic ecosystem from the limitations of the “waterfall” bidding process to the “elegant solution” of header bidding.

The previous sequential approach to bidding gave a massive advantage to those buyers first in the programmatic queue who had first right of refusal over available inventory provided they met a minimum price – and they were still only seeing what was left over from direct sales, making it hard to forecast and assign value to a site.

Header bidding sees the focus of bidding action move from the ad server to the header section of the website. This is a “game changer”, says Prudhomme, which has “evened the playing field amongst buyers by creating a parallel auction where buyers could access all inventory and the best price would win”.

Within a couple of years of its initial development, around 70% of comScore top 200 publishers are now leveraging the technology.

But that has led to new problems, with a sharp increase in the number of bid requests – and amount of data – that demand-side platforms (DSPs) have to manage. This has been exacerbated, Prudhomme notes, by the advent of server-to-server connections, “which reduces latency and encourages publishers to add more exchange partners, creating even more bid requests for DSPs to process”.

The volume of data is costly for DSPs to manage and is forcing them to find ways to limit their supply sources, he says. “How they approach this decision can have major repercussions for the ecosystem.”

Meanwhile, he advises marketers and agencies, “it is critically important for the sake of working media that new technologies like header bidding work in your favour”.

That means ensuring bids are competitive and regularly reviewing the performance of any direct transactions between buyer and publisher within private marketplaces to ensure they are working harder than buys made on the open market.

“Maintain a close relationship with your buying platform,” Prudhomme recommends, and understand how they are approaching topics such as supply path optimisation and supply transparency.

Data sourced from WARC