Waterfalls rule. They’re beautiful in nature—so they must be beautiful in ad tech, right? I mean, think about it: you get to put your best supply side platforms (SSPs) and deals on top and let the other partners get the backfill scraps that trickle down to them. Plus, you can use pass-back tags so that each partner passes the impression back to you if they can’t fill it, and then you can offer it to the next partner. This even allows for double ad serving fees too. What’s not to love?!
Just kidding. Death to the waterfall, I declare! At this point, we’ve all heard that sentiment being shouted from the mountaintops, with overtones of Header bidding, header bidding, header bidding. #headerbidding
We get it—header bidding is a big deal and worth your time. What the industry hasn’t discussed much is header bidding in video—and that, my friends, is where we all stand to gain the most by killing the waterfall.
The Inner Workings of the Waterfall in Video
Before I dive in here, let’s first level-set and try to define the waterfall in video. If you’re like me, when it comes to working with SSPs and DSPs (demand side platforms), you always want to have your cake and eat it too. By that, I mean you work with everyone—you look to capture their “unique demand” and let each SSP fight for their right to be your top SSP. The cream (revenue) should rise to the top, right?
Most SSPs will argue that this approach is wrong and that you need to have all of your inventory in one place so that buyers know where to look. While I can see why this was, at one point, a valid argument, I don’t believe it stands anymore. Each SSP is not created equal, and private marketplace (PMP) deals are ultimately reshaping the programmatic environment.
So, ultimately, you’re going to have to mediate all of these SSPs in some way or another. If you’re like most publishers, you’ll probably mediate them through your ad server. You’ll plug each SSP into your ad server and revenue will come in on Day 1. On Day 2, you’ll allocate traffic to the highest SSPs, based on their Day 1 performance: 25% to one, 30% to another, and so on. (I think it’s safe to say that DFP (DoubleClick for Publishers) is the most popular ad server in the market, so let’s just assume that most publishers are using DFP, i.e. Google).
Now, there’s also the possibility of mediating an SSP with another SSP. (“You can’t triple stamp a double stamp!” Dumb and Dumber, anyone?) Surprisingly, many SSPs will act as your mediation partner and run tags from another SSP—all the while, both SSPs are taking their margins. It’s “coopertition,” and any SSP—especially in video—that says they don’t work with their competitors is lying to you. They all backfill each other in some way or another.
Some SSPs will refuse to play nice in this mediation sandbox, just as some SSPs refuse to go in through another SSP’s header wrapper. This is where publishers like us need to stand strong and force them to play nice or not play at all. Because, let’s be honest: if your wrapper is truly just wrapping other header tags, it shouldn’t give preferential treatment to any of the tags, including your own. The highest bidder should always win—assuming they didn’t time out, obviously.
But I digress.
If all SSPs and DSPs were equal, the waterfall probably would make sense. However, all SSPs and DSPs are not equal. As ad tech continues to change, so too does the role of the SSP.
Luckily for publishers, header bidding has leveled the playing field in a lot of ways. If your SSP is telling you there’s no need for header bidding, it’s a clear sign that they’re scared of losing your inventory to other SSPs. My first question when talking to an SSP about their header tag is, “Why is your demand different?” Each SSP is battling to put a stake in the ground as to how and why they’re different from their competitors.
The Time for Header Bidding in Video is Now
We’re all feeling it. We’re in the doldrums of July’s ad revenue lull. Southern Cali’s June gloom has given way to ad tech’s “July Dry.”
What shall we do to keep ourselves occupied? Plan for Q4, maybe?
If you’re like us, you’ve seen an explosion in PMP sales in 2016, with a large portion of that revenue coming specifically from video. Aye, but therein lies the rub—can PMP growth really explode in video without a video header tag?
Sure, you could just allocate all of your impressions to one SSP so that the PMP deal you just set up with them gets a fighting chance at all your traffic. Put them below the first spot in the waterfall and run the risk of another SSP buying that PMP impression before it even gets to the SSP that needs it—or the one that’s willing to buy it at the highest price.
That’s all fine and dandy, but, as we’ve all discovered, not every agency and DSP wants to work with every SSP. Therefore, you must diversify. We already established that most publishers are mediating SSPs through DFP, so you’re not going to get top dollar for your inventory without every SSP giving you a header tag.
And this, my friends, is the reason for my plea to SSPs to start making header tags for video. As a publisher, if you made money killing the waterfall (i.e. implementing header bidding) in desktop, you’re primed to absolutely crush it when it comes to video.
In the past, video was the last piece of inventory publishers ever thought of sending to the open auction. The “Race to the Bottom” (RTB) mentality kept video inventory close to publishers’ chests, as they always direct-sold it.
Flash forward to the Age of Programmatic. Now, agencies are demanding that you set up PMP deals in order to capture their ad dollars, and they require that it run on their DSP and SSP of choice. As more ad revenue begins to flow into PMP and “always on” deals, the programmatic pipes that were once used strictly for backfill now stand to be the crème de la crème of ad dollars.
The View From the Other Side
“Okay, but what about the advertisers?” you say. Let’s look at this from the DSP side: with header bidding, the world becomes your oyster. You can more accurately forecast inventory, because you see every impression a publisher has to offer. With the waterfall, this type of forecasting was never possible. When the waterfall dies and header bidding takes over, DSPs will have the ability to pay top dollar to win inventory that, before, they might not have even been able to see.
What about the technology behind it all? What needs to be different for header bidding in video to take off? If there’s one thing we’ve learned from VAST and VPAID thus far, it’s that both allow for client-side auctions to happen—which takes us all the way back to our earlier discussion about SSPs arbitraging through other SSPs or backfilling with another SSP partner.
In order for header bidding in video to work, this practice needs to stop. Otherwise, an SSP will win the auction via the header and then auction this unit on their side amongst other SSPs. This means that, even though the header SSP won the opportunity to deliver an ad, they won’t ever serve one, and that ad opportunity will perish—also known as The Timeout. Hence why, with header tags, we will most likely require SSPs to respond with their own demand—otherwise, we’ll run the risk of the same timeouts we currently see in the waterfall.
The Bottom Line
This is my call to arms to all video SSPs in the market: Rise up, create header tags, and let your publishers reap the benefits of a more unified auction.
The time is now, partners. Don’t delay. If you sit back and wait for Q4, you run the risk of being left behind as other video SSPs look at every video impression a publisher has to offer. Watch as their PMP deals skyrocket.
If you build it, they will come. “They” being me. While you’re at it, please integrate your header tag through any and everyone’s wrapper. If you’re good, your demand will work through any wrapper tag.