Thought Leadership

Intelligent allocation is one way header bidding puts you in control

May 18, 2016
By Tom Kershaw

After spending the better part of a decade explaining waterfall analogies and sliding our hands into the open slots of whiteboard ad stack diagrams, let’s face it, our brains may be running like an adserver, always defaulting to the highest price at any given priority level.

And our logic is not wrong: priority and price both remain vital components in ad decisioning. However, in our mission to not ride along with technology but to drive it, we at Rubicon Project believe that the elegance and value of header bidding is shifting that ad server logic into a higher gear.

With the ability to efficiently distribute deal inventory, via intelligent allocation of audiences at every priority level, we are empowering more sellers to eliminate inventory waste, leverage stronger relationships with buyers, unlock additional spend, and further maximize their yield. It is this combination of scarcity, flexibility, and available control that makes the header bidder such an incredible tool. By providing a wealth of deal engagement possibilities, which in turn enables the development of new relationships between buyers and sellers, header bidding is putting sellers not only back into the driver’s seat, but along with an intelligent allocation strategy, into the fast lane.

Maximize the yield on every audience impression

As a modern publisher, your inventory is unique. Whether you have created a distinctive online marketplace or content portal, your audiences represent the endpoint of your valuable inventory. The utilization of opaque 3rd party data by buyers compartmentalizes and validates the scarcity of your audiences, and header bidding presents new opportunities to leverage them. We are now able to monetize specific audiences with greater flexibility than ever before, but most importantly, we can do so with increased efficiency.

While real time, price based auctions have brought us this far, the concepts of eliminating inventory waste and developing relationships with opportunistic buyers have become the new focus points of our most strategic publishers, and intelligent allocation is the vehicle. Now that PMPs can compete at the sponsorship level, thanks to header bidding, the tactical organization of scarce audiences allows a more effective distribution of our inventory never realized before.

Full control over the entire ad stack

Traditionally, direct and sponsorship campaigns have been purchased against impression volume over a certain period of time, with little regard for the audience segments they are reaching. This practice is valid because these campaigns are placing value on the average user of the given property, whether site-wide or homepage specific.

Private Marketplaces, which traditionally have found value in purchasing inventory that is segmented into pools of specific, valuable audiences, were often shelved below the direct and sponsorship campaigns, partly as they did not emphasize volume so much as audience value, but also due to the inability to effectively compete against direct or sponsorship-level prices.

Header bidding reduces inventory waste

Looking at the simplified diagram below, we can visualize one of the many ways in which header bidding’s innate flexibility and available control can enable intelligent audience allocation of scarce audiences. This benefits us in two ways: first by eliminating inventory waste, and second by opening new opportunities for relationship building, both of which can lead to increasing revenue immediately and over time.

The first chart shows an inventory group labeled “conventional allocation,” that has 11 total available impressions. Meanwhile, we see the direct campaign is paying the same price for 6 impressions regardless of the audience segment. Once that campaign has reached its impression goal, an assortment of 5 scarce and non-scarce impressions are leftover, and our Private Marketplace deal will only purchase 2 of them, leaving 3 to the open market.

It is clear then, in the second group labeled “intelligent allocation,” that because PMPs are purchasing those scarce audience impressions simultaneously with the direct campaign, we eliminate the three impressions that previously were sent to the open market. The direct campaign still reaches its impression goal, and we see an increase in revenue. The elimination of waste is a powerful strategy in itself and is also mathematically sound.

Header bidding supports relationship building

By identifying your scarce audience segments and offering them to your opportunistic Private Marketplace buyers, and by repeating to do so over time, you are more likely to unlock additional spend from those buyers. By demonstrating to these buyers that they are gaining access to valuable impressions previously unavailable due to their position in the pre-header bidding ad stack, they will continue to allot additional spend into your Private Marketplace, further maximizing the auction value of each scarce impression.

Intelligent allocation is only one way in which the flexibility and available control of header bidding is working to further optimize your inventory. After growing comfortable with the sheer power that header bidding offers, once-abstract strategies that can further stretch our inventory can become clear, easy to define goals.

Today we are intelligently allocating impressions to reduce waste and open new opportunities in relationship building. Tomorrow? The possibilities will continue to expand. We’re not just riding along with our technology anymore. Header bidding is just one of the ways Rubicon Project is pushing to get you back into the driver’s seat to make the most of your unique content.

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