Header bidding - it's all the rage. What is it and why does it matter?
DoubleClick for Publishers (DFP) is the publisher adserver used by the majority of the web. Its primary objective is to help publishers and their sales team run campaigns that they've sold, according to priorities defined by that publisher. It is not a yield / revenue maximizing solution. By and large, publishers set up campaigns according to strict priorities (campaign priority 1 generally runs before 2, as long as it's eligible, and so forth through the decreasing priorities). Price is not a factor - so even though priority 2 may pay more per impression, DFP will respect the prioritization. For example, sponsorships might run 100% of the time on a page, for a certain number of impressions, regardless of the price.
This presents a challenge for SSPs (e.g. Rubicon, Pubmatic, etc) and other parties (e.g. Criteo, Amazon, etc.) that need to deal with the fact that publishers use DFP, DFP doesn't care about yield, and their mission is maximizing publisher revenue. Further, how could the SSPs compete in a world where they can't submit RTB bids to DFP to express the actual valuation - and preempt certain auctions? This is the problem that header bidding is meant to solve. Specifically, how can publishers maximize their yield in a DFP world focused on relatively fixed priorities that don't necessarily reflect price.
DFP lets you specify certain attributes to be included in the decisioning on the client side. So you could set a certain flag to X and another to Y, and this would influence which ad is delivered - all according to the targeting rules specified in DFP.
With header bidding, SSPs and other participants get a special request before the ad request is sent to DFP. They either hold an auction and value the impression or value it with some approximation. The results are included in the response. In a hypothetical example, there are 3 header bidding partners (Criteo, Rubicon, Amazon [and soon, TripleLift]). Their response is collected on the client by the browser, with a set of keys and values (which here are bids by partner), as well as some data about the ad that won the internal auction of each partner. This is ultimately fed into DFP with the request for the impression. The publisher, in turn, has set up DFP to handle parsing this data and prioritizing partners bids accordingly. As a result, dynamic pricing can influence the prioritization of campaigns and what serves.
It should also be noted that Google has now integrated DFP with AdX, meaning Google has ability to inject dynamic valuation into publisher's adserving, but only allowing their own SSP. Header bidding levels the playing field (to a certain degree).