Header Bidding vs. Waterfall: A Detailed Comparison

Header Bidding vs. Waterfall: A Detailed Comparison

For publishers looking to maximise their advertising revenue, understanding the different methods of ad serving is crucial. Two of the most prevalent methods are the traditional waterfall method and the more modern header bidding. This article provides a detailed comparison of these two approaches, highlighting their advantages and disadvantages to help you make an informed decision.

1. Explaining the Waterfall Method

The waterfall method, also known as sequential bidding, has been a standard practice in the advertising industry for many years. It involves a sequential process where ad requests are passed to different ad networks or exchanges one at a time, in a pre-defined order. This order is usually determined by historical performance or perceived value.

How it Works

• When a user visits a webpage, an ad request is sent.

• The publisher's ad server sends the request to the first ad network in the waterfall.

• If the first network doesn't have an ad to serve or the bid is below a certain threshold, the request is passed to the next network in the waterfall.

• This process continues down the line until an ad is served or the waterfall is exhausted.

Advantages of the Waterfall Method

Simplicity: The waterfall method is relatively easy to set up and manage, especially for publishers with limited technical resources.
Control: Publishers have full control over the order in which ad networks are called, allowing them to prioritise partners based on past performance or strategic relationships.

Disadvantages of the Waterfall Method

Revenue Loss: The sequential nature of the waterfall means that lower-paying ad networks are often given the first opportunity to bid, potentially resulting in lost revenue if a higher-paying network further down the line would have been willing to pay more.
Latency: The sequential process can introduce latency, as each ad network needs time to respond to the ad request. This can negatively impact page load speed and user experience.
Lack of Transparency: Publishers may not have full visibility into the bids being offered by different ad networks, making it difficult to optimise their ad inventory effectively.

2. Explaining Header Bidding

Header bidding, also known as pre-bid, is a more advanced ad serving technique that allows multiple ad exchanges and networks to bid on ad inventory simultaneously. This creates a more competitive bidding environment, potentially leading to higher revenue for publishers. Learn more about Monetization and how we can help you implement header bidding.

How it Works

Increased Revenue: By allowing multiple ad partners to bid simultaneously, header bidding creates a more competitive environment, leading to higher bids and increased revenue for publishers.
Improved Fill Rates: Header bidding can help publishers fill more of their ad inventory, as more ad partners have the opportunity to bid on each impression.
Greater Transparency: Header bidding provides publishers with more visibility into the bids being offered by different ad partners, allowing them to optimise their ad inventory more effectively.

Disadvantages of Header Bidding

Implementation Complexity: Header bidding can be more complex to implement than the waterfall method, requiring technical expertise and potentially the use of a header bidding wrapper.
Latency: While header bidding aims to reduce latency compared to the waterfall, improper implementation can still lead to slower page load speeds. Optimisation is key.
Maintenance: Header bidding requires ongoing maintenance and optimisation to ensure optimal performance.

3. Revenue Potential Comparison

One of the most significant differences between header bidding and the waterfall method is their revenue potential. Header bidding generally offers a higher revenue potential due to its competitive bidding environment. By allowing multiple ad partners to bid simultaneously, publishers can ensure they are getting the best possible price for their ad inventory.

Waterfall: Revenue is limited by the sequential nature of the bidding process. Lower-paying networks get the first opportunity, potentially missing out on higher bids.
Header Bidding: Revenue is maximised through simultaneous bidding, ensuring the highest bid wins each auction. This increased competition drives up prices.

While header bidding typically yields higher revenue, the actual increase depends on various factors, including website traffic, ad inventory quality, and the number of ad partners participating in the auction. Publishers should carefully analyse their specific circumstances to determine the potential revenue uplift.

4. Implementation Complexity

The implementation complexity is another key difference between the two methods. The waterfall method is relatively simple to set up, while header bidding requires more technical expertise.

Waterfall: Simple to implement, often requiring minimal coding or technical knowledge. Easy to manage through the ad server interface.
Header Bidding: More complex to implement, requiring JavaScript coding and integration with multiple ad partners. Often involves using a header bidding wrapper to simplify management.

Publishers with limited technical resources may find the waterfall method more appealing due to its simplicity. However, the increased revenue potential of header bidding may justify the investment in technical expertise or the use of a managed header bidding solution. Consider our services to help with implementation.

5. Latency and Page Load Speed

Latency and page load speed are critical factors to consider when choosing an ad serving method. Slow page load speeds can negatively impact user experience and SEO rankings.

Waterfall: The sequential nature of the waterfall can introduce latency, as each ad network needs time to respond to the ad request. This can slow down page load speeds, especially if multiple networks are included in the waterfall.
Header Bidding: While header bidding aims to reduce latency through simultaneous bidding, improper implementation can still lead to slower page load speeds. Optimisation is crucial to ensure that ad requests are processed efficiently.

To minimise latency with header bidding, publishers should carefully optimise their implementation, including using asynchronous loading, setting appropriate timeouts, and working with reputable ad partners. A well-optimised header bidding setup can often outperform a poorly configured waterfall in terms of page load speed.

6. Transparency and Control

Transparency and control are important considerations for publishers who want to understand how their ad inventory is being sold and ensure they are getting the best possible value.

Waterfall: Transparency can be limited, as publishers may not have full visibility into the bids being offered by different ad networks. Control is high in terms of setting the order of the waterfall, but limited in terms of influencing individual bid prices.

• Header Bidding: Header bidding offers greater transparency, as publishers can see the bids being offered by different ad partners in real-time. This allows them to optimise their ad inventory more effectively and identify opportunities to increase revenue. Control is exercised through configuration of the header bidding wrapper and selection of participating ad partners. For frequently asked questions about header bidding, see our FAQ page.

In conclusion, both header bidding and the waterfall method have their own advantages and disadvantages. The best choice for a publisher depends on their specific needs, technical resources, and revenue goals. Publishers should carefully weigh the factors discussed in this article to make an informed decision and maximise their advertising revenue.