Header Bidding Vs. Waterfall: What’s The Difference?

Header Bidding Vs. Waterfall: What’s The Difference?

Not sure which strategy to use? Knowing the difference between Header Bidding vs. Waterfall might mean the difference between lackluster impressions and skyrocketing ad revenue. We’ll cover both to show which option gets ads moving.

Which strategy will increase your viewability and drive revenue from premium ads? Take a moment to master these key topic areas:   

  • What is Header Bidding?
  • What is a Waterfall Auction?
  • Key differences between Header Bidding vs. Waterfall
  • Why Header Bidding is the Future of Programmatic Advertising

Weighing the benefits of direct vs. programmatic advertising?  Here’s what you need to know.

What Is Header Bidding?

Header bidding is an advanced programmatic advertising technique that allows publishers to offer their ad space to several ad exchanges simultaneously before making calls to their ad servers or SSPs. By opening the inventory to multiple bidders simultaneously, header bidding ensures that publishers maximize the potential revenue from each ad slot, increasing competition among advertisers. The benefit to advertisers is equally clear, as they gain access to premium inventory that might otherwise be unavailable. This level of accessibility and efficiency is why header bidding has become a cornerstone strategy in digital advertising. Header bidding is also called open bidding within Google and was formerly called exchange bidding.

Want the full story? What is Header Bidding? Header Bidding Explained.

Advantages Of Header Bidding

Everyone understands this! The ad slot isn’t awarded until the highest bid is identified. Thus, ad prices are higher than traditional RTB, increasing ad revenue. Other key benefits:

  • Improved Advertiser Access and Ad Fill Rates – Helpful for publishers with niche
  • Enhanced Control Over Ad Inventory and Pricing – Publishers set floor prices,
  • Improved Ad Latency – Ads served faster once a page starts to load = better user experience.

Drawbacks Of Header Bidding

Every system has potential drawbacks. We’ve pulled together the most common issues when considering header bidding, including latency. While ads are served up faster once a page starts to load, page-load time may be impacted when necessary scripts are added to a page. Slow-loading ads can equal fewer impressions, impacting viewability.

  • Browser compatibility issues
  • Risk of duplicating bid processing efforts
  • Performance impact due to older PCs, laptops, devices, and smartphones

What Is A Waterfall Auction?

No publishers want to deal with unsold ad slots. In the past, there were few guarantees that all impressions could be quickly and easily moved using the technology available at the time. Programmatic advertising changed all that, providing a model that has morphed into a waterfall auction (AKA waterfall tags or daisy-chaining).

In waterfall bidding, the publisher pushes its ad inventory from ad network to  ad network, prioritized by revenue potential and ranked by past performance or average historical yield. The inventory will continue to move along until, hopefully, it is depleted.

Advantages Of A Waterfall Auction

One beauty of this model? Easy setup. The waterfall auction only uses passback tags, allowing ad inventory to move through multiple SSPs to reach potential bidders. Since the goal is to leave no inventory unsold, waterfall auctions enable publishers to sell remnant ad inventory not sold in advance. The model ranks ad networks in order of yield, meaning higher revenues are possible at the beginning of the daisy-chain, but will diminish as the inventory moves on to lower networks.

Drawbacks Of A Waterfall Auction

While clearing inventory is an advantage, one distinct disadvantage of this strategy is lower revenue opportunities for publishers. It depends on where a network enters the bidding process. Higher bids are offered earlier in the auction, and those who might have paid earlier could now bid less or get edged out entirely. Because the publisher accepts bids from the ad network in the sequence, less competition flourishes. The length of the process may also impact page latency.

Key Differences Between Header Bidding Vs. Waterfall

Let’s break down the difference between header bidding vs. waterfall bidding. Primarily, header bidding allows simultaneous impressions with RTB versus sequential impressions through the waterfall method. With header bidding, the publisher can move all inventory versus the typical remnant inventory with waterfall. While header bidding has a more complex setup than waterfall,  it offers higher revenue uplift and increased ad fill rates due to competition. You can expect higher CPMs overall compared to CPMs sold at the price floor with waterfall.

The benefits of header bidding to publishers and advertisers don’t stop there. Add on bid-level reporting data, lower ad discrepancy, multiple demand partners, and improved ad spend efficiency. A winning combination. Header bidding has bragging rights in the evolution of digital advertising, serving up better campaign performance and strategic flexibility where you need it.

Why Header Bidding Is The Future Of Programmatic Advertising

Let’s look at Minute Media, a premier digital media company overseeing a diverse portfolio of culture and sports websites. Despite an impressive user growth rate, revenue lagged due to underperforming existing SSP bidders. Consequently, compromising site speed. They sought an ad partner with exclusive, unique demand unavailable on the Open Exchange.

Enter Next Millennium, providing Minute Media programmatic solutions and unique demand, resulting in $2 million in new revenue, a 7% lift. They also experienced an 11% win rate with clean audience matching. These are fantastic results, with no negative impact on page speed or user experience. Revenue and CPMs were even higher than initially agreed upon. This example, and many more, shows that header bidding has a strong position in programmatic advertising, offering a previously underheard-of strategic boost. Its appeal will only grow.

Next Millennium: Your Programmatic Advertising And Header Bidding Experts

As technical as the nuances of ad auctions can be, at the root, each advertiser and publisher has a distinct desire to build a brand and grow revenue that we completely respect. That’s why we deeply value the personal approach when bringing bankable results to every client.

Knowing the technology and patenting much of our own, we can unleash this systematic power and do the seemingly unachievable. We want to help you grow your ad know-how too.

Want proof? On average, Next Millennium clients increase ad revenues by ~200% with approximately 2.1x higher ad yield, consistently surpassing Google benchmarks across key ad formats. These types of results are what make us trusted around the world, ranking us number one in campaign quality. We serve over 2 billion ads monthly, averaging 35 seconds in view.

Want in? Book a discovery call. We’ll walk you through the process and answer all your questions. Or get started on your own at: nextmillennium.io/publishers

Josh Isaac