Estimated reading time: 3 minutes, 13 seconds

Publisher LittleThings recently said it increased its video advertising rates by 20% by implementing a unified auction strategy, which is also called header bidding.

The increased revenue has occurred after the company laid off 13 people, reduced the amount of content it produces for Facebook Live, and created a post-production team to publish its content on platforms such as Apple TV, Amazon, Roku, and TubiTV. So reports DigiDay.

LittleThings’ results are consistent with a common view that the unified auction strategy can boost rates that publishers charge for advertising. That explains, in large part, why many publishers have been adopting the approach.

Some publishing executives and digital marketing consultants, however, caution that unified auctions have limitations and that the strategy has certain drawbacks. Unified auctions are typically used with image advertising instead of video advertising because the strategy can increase the amount of time required to download pages. In addition, unlike with video content, the bidding to purchase advertising occurs in the header of webpages, hence, the name header bidder.

Video publishers, however, have adopted similar strategies that are also referred to as unified auctions. Advocates of header bidding point to the increased advertising revenue that the strategy can generate. In addition to selling impressions at higher rates, header bidding can also increase demand for advertising, which in turn reduces publishers’ unused advertising inventory.

Header bidding is a departure from what many digital marketers refer to as waterfall selling. With waterfall selling, priority advertisers who have typically purchased advertising space directly with publishers get first dibs at buying placement for their content. In instances when they reject buying advertising slots, other advertisers are given an opportunity to engage in real time bidding to buy opportunities to display their content.

As the process moves to lower priority purchasers, the pricing for the advertising also decreases. The process is similar to lowering the price for a bag of apples after each potential customer fails to purchase it, explains AdProfs. The website provides a lengthy description of how header purchasing works.

With header bidding, however, all potential buyers have an opportunity to bid. The process is called header bidding because much of the bidding process occurs within webpage headers. The header portion of websites is the first part of a webpage to download. It typically has data regarding the webpage content, so it can be an attractive location for conducting auctions.

Many industry observers have opined that header bidding is likely to grow quickly as more publishers seek to optimize their advertising rates and reduce unfilled inventory. Yet, not everyone is jumping on the header bidding bandwagon. Earlier this year, Jessica Barrett, global head of programmatic at The Financial Times, gave header bidding the thumbs down. So reports The Drum.

After relaunching its webpage in 2016, the publisher made the lofty claim that The Financial Times is the world’s quickest loading news website. Barrett maintains that the website’s ability to download content quickly resulted in a 30% increase in reader engagement.

The Financial Times, she explains, already has high sell-through rates and CPMs, so she doesn’t believe that header bidding will increase revenues. She’s concerned that header bidding would increase webpage loading times and result in losing subscribers.

Header bidding also has technology challenges. Demand side platforms are just one concern. The platforms convey advertising purchases from brands to publishers. Many of the platforms have reported that header bidding is dramatically increasing the volume of bids that they process, reports DigiDay.

The Trade Desk, for example, saw its bidding volume increase over two years from 1 million to more than 5.7 million. So far, it appears that demand side platforms haven’t passed on the extra costs of processing increased number of bids to advertisers. The dramatic increase in bidding, however, could put smaller demand-side platforms that may not have resources to increase their capabilities at a competitive disadvantage.

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