At ATS New York, Natrian Maxwell (pictured below), director of demand services, OpenX, delivered a keynote speech on header bidding and the road to success through programmatic direct. ExchangeWire caught up with Maxwell after the event to delve into the detail of the keynote.

ExchangeWire: Header bidding has put the industry in a situation where the publisher’s ad server is responsible for programmatic decisioning – what challenges does this present?

Natrian Maxwell: This shift in programmatic decisioning really identifies some of the inefficiencies that exist between the buy side and supply side during the auction process. For example, we see the following four areas stretched to their limits as it relates to ad servers: ad server selection workflow, combining second-price auctions with first-price auctions, lack of transparency into the selection process, and, finally, market competition between reserved and non-reserved inventory demand.

Ad servers were built to make decisions based on static line items where an advertiser, pricing, and priority were clearly defined upfront. As programmatic buying methods continue to become more advanced, ad servers must now decide between dynamic bids using second-price auctions with multiple brands and formats, while evaluating first-price bids from native line items booked and sold by a publisher’s direct sales team. On top of that, programmatic buyers find themselves lacking transparency and insights into the ad server selection process when accessing inventory through header bidding, hindering their ability to optimise bidding strategy.

Further, auctions and direct campaigns that once ran in two separate environments, have started to run in parallel to each other using different logic and tactics to serve impressions within the same page. Over the next 12 months, we are going to see a shift in inventory prioritisation on the supply side and the concept of publisher waterfalls shifting to a horizontal marketplace in which programmatic demand competes directly with direct-sold inventory.

One of the biggest challenges with header bidding is latency – how is this being addressed? Are developments such as header bidder wrappers the answer?

Natrian Maxwell, Director of Demand Services, OpenX

A lot of the noise in the industry around speed focuses on the header bidding partners on each page, rather than the party that actually owns the speed controls, the publisher. Publishers need to optimise the backend of the auction to meet the criteria for each of their individual sites. They should work closely with their technology partners, to not only optimise their header bidding integrations, but also on other key elements of their pages that impact speed (and, in turn, user experience): page design, network transit, auction timing, and ad creative.

That said, there is also a lack of understanding in the industry when it comes to adding containers and managing multiple header bidding implementations. To minimise the negative effects of latency, with regard to header bidding, publishers should limit the partners they work with to just the ones that provide incremental value.

Overcoming this hurdle requires publishers to take a holistic view of their digital properties, in particular their page load speeds, and adopt standardised methods for establishing a user-friendly site, such as the Internet Advertising Bureau’s (IAB) LEAN principle. LEAN considers four key pillars of speed in detail: the page, including how many header tags are viable; the network, focusing on the quality of connection types; auction set-up and optimisation; and how the effects of creative formats on loading time can be minimised.

Are publishers seeing a lift in revenue as a result of header bidding?

Absolutely. At OpenX, we’ve seen publishers increase revenue from 20% to more than 50% after implementing header bidding on their page. The technology is exciting because publishers are adding higher quality inventory into the exchange and unlocking opportunities for high-value demand partners to compete for inventory that may not have been historically available through a waterfall type of setup.

But, header bidding is not a ‘plug and play’ tool; it is a long-term strategic investment that must be thoughtfully and effectively integrated to produce improved results. This means those on the sell side should set clear expectations of technology partners with regard to support services, revenue management, and speed of implementation. To ensure lasting success, publishers must have a complete picture of feasibility, both before adoption and for the on-going cycle of testing, measurement, and adjustments after integration.

Is header bidding yielding returns for advertisers? How is it helping buyers and sellers to connect?

Most buyers have viewed header bidding as a seller’s tool – yet this perception is changing as buyers become more aware of the opportunities the technology provides them. Buyers are beginning to recognise that, with header bidding, they’re able to obtain a transparent view of inventory availability, while also enhancing their targeting precision.

Buyers with access to the full spectrum of a publisher’s inventory in an RTB environment are able to better analyse the value of each impression, choosing placements that present the best chance of engaging their target audience. The technology also gives buyers access to incremental users, and is enabling stronger capabilities in other buying models, like programmatic guaranteed, by allowing buyers to recreate direct deals through programmatic pipes.

Header bidding is often discussed in the context of UK and US activity – are other markets experiencing header bidding success?

Adoption rates of header bidding have skyrocketed in the US and EMEA over the last year and a half; but the technology has grown at a slower rate elsewhere. Once header bidding makes its way into various other markets, like Japan or China, we expect publishers will see similar success.

The main reason we are not seeing the same type of adoption in APAC is related to the marketplace differences between the US/EMEA and APAC. For example, mobile plays a much larger role in APAC; whereas the US and EMEA have historically been much more focused on display advertising. As the technology that powers header bidding in the app environment matures, we will begin to see a similar increase in APAC as we have seen here in the US and EMEA.

One of our goals for the coming year is to leverage our leadership position and deep-rooted expertise in header bidding to educate these markets on header bidding’s potential to generate incremental revenue across desktop display, mobile, and video.

Is header bidding the future or the means to achieve a holistic buying model in the current market? What does the future look like?

We’ve only scratched the surface when it comes to fully understanding the impact header bidding will have on the future of our industry. Real-time guaranteed seems to be the direction in which the industry is headed; and for that to become a reality, header bidding is absolutely a critical piece with ensuring that an advertiser’s high-value audience is available at scale through programmatic pipes. Other trends we see coming include better forecasting, higher quality placements, and new tools and insights being developed for the demand side.

Long term, header bidding becomes the normal integration standard that sets the stage for the success of newer, improved buying models, that bring the industry one step closer to a truly unified auction where non-guaranteed and guaranteed inventory compete in a single marketplace. By giving access to all of a publisher’s available inventory, header bidding, combined with programmatic guarantees, enables publishers to offer marketers both choice and certainty simultaneously, which has never been done before. Marketers will have 100% access to quality inventory and maintain the ability to choose the impressions they want in real time. This is a huge advancement in terms of programmatic buying and what many would define as the ideal end state for programmatic buying channels.