We are in the midst of a revolution. There is an uprising in the ad tech industry today against the rampant unfair and non-transparent practices. The industry now demands simplicity, and above all, equality. In February, we introduced FairBid, a bold step forward to bring equality to advertisers and publishers like you. FairBid is the first product to make in-app header bidding a reality.
At our recent Game Developers Conference 2018 panel on in-app header bidding, Fyber, along with mobile game ad monetization pros from Glu, AdColony, SEGA, Pixelberry Studios, and MobilityWare, tackled this topic. Read on to learn how the mobile ad tech industry is moving from a world of waterfalling to a world of header bidding.
In the beginning
Before we explain the significance of in-app header bidding today, we must first understand mobile ad tech’s past. The day was October 15, 2009. Apple announced support for app developers who wanted to monetize free mobile games and apps with in-app purchases. Around the same time, Fyber was founded, first as a mobile ad network.
Over time, we started to come across a couple of recurring themes while working with our customers:
- No mobile app publisher worked with just one ad network. Every app publisher partnered with at least two or more ad networks. The additional competition created by adding more and more ad networks had a material impact on yield and ultimately ad revenue.
- However, it was a pain for publishers to manage all of the associated SDKs for each ad network. After integrating each SDK, publishers were fairly limited with tools at their disposal to allocate their ad inventory among these networks.
Enter ad mediation
To address the pain points of our publishers, we pivoted. In 2013, Fyber launched its mobile ad mediation platform, focused specifically on rewarded video. Fast forward to today, and most app developers will say that using a mobile ad mediation platform is a no-brainer. With a mediation platform, app publishers only need to directly integrate a mediation platform’s SDK, which streamlines the development work in order to integrate multiple ad networks.
The core value add that mediation platforms give publishers is still the same two things:
- A single SDK that provides app publishers with access to a plethora of different demand sources.
- Tools that enable publishers to make changes as to how their ad inventory is divided up among the demand sources.
What is mobile ad mediation—in one sentence
Mobile ad mediation platforms like Fyber include a key feature that enables publishers to manage how they want to allocate their ad inventory among various mobile ad networks as efficiently as possible—without making any code changes to their mobile apps and games.
The practice of waterfalling
People tend to give names to things to describe complex concepts—mediation included. Thus, the term “waterfalling” was born. When publishers use this key feature provided by mediation platforms to manage their ad inventory, what they’re doing is ranking ad networks from highest expected eCPM to lowest, giving the ad network that will pay the highest the first opportunity to respond with an ad. So every time a publisher makes an ad request, this ranked list, known as the waterfall, indicates which ad network gets to respond first, second, and so on until a demand source responds with an ad fill.
Manual waterfall optimization
Waterfalling isn’t, however, a set-and-forget-it endeavor. After a publisher waterfall is first set up, it requires continuous reordering as expected eCPMs fluctuate. Now, there are two schools of thought when it comes to waterfall management: The manual or automated approach. Some publishers prefer to have full control and visibility over the waterfall by manually ordering mobile ad networks. In this scenario, publishers often assign an ad monetization manager or an entire ad ops team with collecting and analyze data from the past for each ad network. After that, ad monetization teams would come up with estimates as to how each ad network will perform in the future based on past performance. Once these steps are completed, they would log into a mediation platform’s dashboard and order their ad network partners in descending order from highest to lowest expected eCPM.
Automated waterfall optimization
For app publishers that prefer to automate their waterfall management, most mobile ad mediation platforms on the market offer some sort of automated yield optimization technology, usually in the form of a predictive algorithm. Instead of a publisher relying on a person at their company to collect and analyze historical ad performance data, forecast ad network performance, and order mobile ad networks in a waterfall from highest expected eCPM to lowest, an algorithm handles the entire process.
Whether you fall into the automated waterfall management camp or the latter manual waterfall management camp, the ultimate goal of mediation remains the same: To sell your ad inventory at the highest price through increased competition. A waterfall model, however, skews the true market value of a publisher’s ad inventory.
Figuratively speaking, a publisher waterfall is a waiting list. When a publisher sends an ad request to their waterfall, a mobile ad mediation platform would call each mobile ad network in order—mainly based on the expected eCPM from highest to lowest. The first ad network on this so-called waiting list would get the first opportunity to respond with an ad fill. If the ad network in the first position can’t return an ad fill, then, and only then, can an ad network in the second position act on the ad request. In any waterfall setup where buyers are locked into fixed positions, then there’s going to be an opportunity cost involved. How massive of an opportunity cost? Web publishers last year saw CPMs increase 30-40% when they added header bidding support.
Header bidding: A definition
So what exactly is header bidding? A term that originated in the programmatic desktop industry, header bidding is a digital advertising technique that allows publishers to offer up ad inventory for all demand sources at the same time. Seen through the lens of an ad buyer, header bidding is a trading mechanism that allows buyers to compete for ad inventory at the same time. It’s important not to interpret the word “header” in header bidding from a literal perspective, but rather digest the concept it expresses.
Why header bidding revolutionizes in-app ad monetization
History tends to repeat itself. Header bidding deleted the cumbersome waterfalling process for the programmatic desktop industry, flattening it to the point where all buyers compete in real time and side-by-side. The same trend is making its way to the mobile ad tech industry. With in-app header bidding, app publishers simply send an ad request to all buyers at the same time, the buyers respond in real time with bids, and the buyer with the highest bid price automatically gets to serve the ad.
In February, we introduced our in-app header bidding solution FairBid. It’s the first in-app header bidding setup that treats all sources of demand as equal—from the SDK-based mobile ad networks that app developers are familiar with including AdColony and Tapjoy with more to follow, to a publisher’s direct sold campaigns, to brand campaigns from the likes of P&G coming from the leading DSPs. All of these types of buyers will have a fair opportunity to compete in a real-time, unified auction for every single ad impression.
For mobile ad networks that are still making the transition to real-time bidding, we developed a solution that enables these networks to still participate in the auction. Rather than ingesting real-time bids from these networks, FairBid will estimate an expected eCPM in the form of a “mock bid,” or a publisher can manually set an eCPM value.
3 reasons why in-app header bidding will make you more money
With that said, there are three reasons why in-app header bidding should make any mobile app publisher take notice:
- Unprecedented level of transparency: The black box algorithm is no more. Gone are the days of wondering why a mediation platform’s algorithm decided to prioritize one demand source over another, particularly when it’s the mediation’s own demand. For the first time, app publishers can see what each demand source was willing to bid on an impression level.
- Real-time competition for every impression: All buyers will compete on an even playing field in real time within a single, unified auction for every impression.
- Opens the door for more brands to compete: Historically, mobile ad networks have ruled the top of publisher waterfalls in mobile, because they have the strongest average expected eCPMs. In an in-app header bidding environment thanks to FairBid, brands, which typically buy through DSPs, will be on equal footing with performance-based campaigns from mobile ad networks. It’s the best of both worlds, with brand buyers competing side-by-side with performance-based buyers.