Header bidding is fake news according to app advertising expert

Some mobile ad / marketing companies have announced they now offer "header bidding" for their mobile advertisers and publishers. But Freddy Friedman, the CPO at Smaato, says it's fake news and header bidding doesn't really exist yet. He says what they are really offering is mediated auctions, not "real" header bidding. We recently spoke with Freddy to gain his perspective on the matter.

ADM: If publishers don't have in-app header bidding now, then what do they have?

Friedman: There are several companies marketing in-app header bidding solutions, but they’re really just offering mediated auctions. These are useful solutions, to be sure, but they’re not the same. Think of them as diet header bidding solutions. 

Smaato’s own mediated auction solution, known as Dynamic Demand, was developed back in 2015. It’s been (and still is) helpful to app publishers, who wanted to move away from the outdated waterfall approach. But there’s still further to go. 

ADM: What are the benefits of mediated auctions compared to a waterfall approach?

Friedman: With a waterfall model, a publisher's inventory is passed down from demand partner to demand partner until the inventory is sold. One of the downsides to the waterfall approach is that the buyer at the top of the waterfall isn't always the highest spender. The advertisers willing to spend the most might not even get the chance to bid within the waterfall at all. This obviously isn’t ideal for publishers. 

Mediated auctions, on the other hand, go a long way in helping improve competition within in-app auction dynamics. A mediated auction allows DSPs and ad networks to compete at the exchange level, improving the likelihood that the advertisers willing to pay the highest price get a shot at publishers’ inventory. But while this sounds a lot like header bidding, it stops a step short. 

ADM: So then what is "true" in-app header bidding"?

Friedman: True in-app header bidding uses real-time pricing competition, as opposed to mediated auctions, which use historical pricing competition. Additionally, with a true header bidding model, the publisher knows the actual bid of every bidder involved. Unfortunately, many in-app header bidding offerings currently on the market still hide this information in a “black box” approach.

ADM: Why is it a problem that tech companies are calling their mediated auctions "in-app header bidding"? 

Friedman: Quite simply, it creates confusion in an industry that already has too much of that. And what many companies are marketing as in-app header bidding just isn’t accurate.

I believe we will start to see true in-app header bidding solutions hit the market in early 2019 - ones that offer a great deal of benefit for publishers. But due to the current confusion that exists around in-app header bidding, industry players might hear about these new solutions and think they’re the same as what’s already on the market. So as an industry, we need to work together to spread the truth. 

ADM: What additional benefits will publishers get from true in-app header bidding?

Friedman: True in-app header bidding is going to take the benefits that have been seen with mediated auctions and crank them up a level. That means full control and higher revenues for publishers, as well as greater transparency for all parties. As an industry, we should all be excited about what’s to come.

ADM: Are there any limitations that come from switching to true in-app header bidding?

Friedman: I wouldn’t say there are any limitations, but maybe some concerns. For DSPs, duplicate bids are a well-known challenge with header bidding. But with supply path optimization reaching maturity in 2019, I believe all of the key players will be adequately prepared. For publishers, the process of implementing and testing new solutions may put added pressure on their development teams. But that said, true in-app header bidding will be a win-win for both sides of the programmatic advertising ecosystem. 

ADM: When will we start to see these options in-market, and which of these solutions will publishers adopt?

Friedman: We’re going to see the first of these new in-app header bidding solutions hit the market in early 2019, and I expect that most players will follow suit if they want to stay competitive. The biggest question will be which new solution the majority of publishers fully adopt. Needless to say, it’s going to be an exciting year for in-app advertising.