Header Bidding, sometimes reffered to as “advance bidding” or “pre-bidding”, is a type of programmatic technique for publishers. They can offer their inventory to multiple ad exchanges simultaneously before making calls to their ad servers.
The idea behind the Header Bidding process is the following: Muliple advertisers bid on the same inventory at the same time. Like this, publishers can increase their revenue and monetize their advertising inventory more efficiently.
Although programmatic buying via real-time bidding (short: RTB) has clearly fastened the trade with online advertising inventory, it is still plagued by some inefficiencies:
Usually, publishers sell their inventory in the programmatic buying process according to the waterfall principle. This means their inventory is offered in the highest ranked ad network first. If it remains unsold, it will be offered in the network with the second highest rating, and so on.
The inefficiency here comes from the way the ad networks are ranked. Ad networks are usually ranked according to their buying volume, meaning the biggest buyer goes first. But since the biggest buyer is not necessarily the one that will pay most for an ad, publishers cannot monetize their inventory optimally.
Because Header Bidding makes advertisers bid simultaneously on advertising inventory, it enables publishers to generate the highest possible income for their inventory.