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S2S to save header bidding from SDK tyranny, report claims

In just one year the tables have turned dramatically, with desktops now woefully inferior in the act of monetizing video impressions when compared with mobile devices, despite enjoying a larger share of daily screen time, according to findings out this week. The ultimate winner here will be mobile header bidding, according to PubMatic, a US provider of programmatic advertising technology.

While desktops managed to monetize 76% of impressions through PubMatic in Q3 2017, this figure fell to just 47% in Q3 2018, while mobile soared from 24% to 53% in the same period, as reported in PubMatic’s Quarterly Mobile Index (QMI). It looks more impressive when factoring in that 56% of the time US adults spend streaming video occurs on desktop, compared to 44% mobile viewing.

People began getting excited about header bidding early last year when Amazon kicked off the Amazon Advertising Platform, a demand-side platform for providing programmatic advertising, and Facebook followed into header bidding soon after. Header bidding is a sell-side advanced flavor of programmatic that lets multiple ad technology firms bid on ad space at the same time, in theory yielding higher returns for ad inventory for publishers. It works by contacting multiple exchanges with inventory bids to see how much money is on the table for each impression.

Only a fortnight ago, Conviva published figures showing a swing of streaming hours from mobile devices to connected TVs, in which PCs are the eventual casualty, so we hope PubMatic’s next report factors in the tranche of video impressions being monetized on connected TVs, alongside mobile and PC. At the end of the day, monetizing the time spent viewing content is more important than growing unmonetized hours, as PubMatic highlights.

Looking back at the Programmatic Advertising report from our sister service Rethink TV, published in October last year, we discussed the rise of header bidding for outstream video (an auto-playing video inserted into a traditional display ad space) ads from 2017 to 2018, addressing the same shift from digital advertising to video advertising platforms that PubMatic has cited. As for wider use, header bidding will most likely be limited to outstream video, not long-form OTT or VoD content, where content owners are still interested in having direct relationships with buyers.

One of PubMatic’s key takeaways is that after becoming mainstream on the web, header bidding is now making strides into app environments, a trend which will continue throughout 2019, incorporating the benefits of server-to-server (S2S) functionality to minimize the current SDK drawbacks and bringing various monetization opportunities. “Publishers who keep up with the evolution of in-app header bidding will stand to tap into a fast-growing revenue stream over the next 18 months,” it states.

Asia Pacific leads the world in terms of the growth of monetized mobile header bidding volume enabled by PubMatic technology, over both web and mobile, increasing 135% year on year as of Q3 2018. Meanwhile, the Americas grew by 121% and EMEA just 22%.

As for obstacles, our understanding is one of latency arguably being the largest for header bidding in video; along with other concerns around data leakage and cross-channel conflict. Limited understanding of technology was found to be the primary hurdle among respondents of PubMatic’s survey, with 31% of votes, followed by implementation issues with 23%, and few programmatic deals with 14%. Surprisingly, latency appeared in joint fourth place along with difficulty scaling private marketplace deals, both receiving 11% selection, followed by compatibility issues with 10%.

But in order for header bidding to really enjoy a greater share of app inventory, further improvements to SDK integrations and S2S set ups are first required. The research claims S2S will drive app-based header bidding by addressing shortcomings of SDK such as increased download size, stability risks, poor UX caused by bugs, and additional consumption of developer resources. It says S2S set ups mean demand sources can be added or removed across an app’s entire installed base without redeployment – reducing overall download size with only a primary partner’s SDK required on the app while other demand is accessed server-side.

The arrival of PubMatic’s report prompted a revisit of a conversation Faultline Online Reporter had with an ad tech start-up called Cedato in March last year, in the same week Facebook partnered with five ad tech industry players for header bidding – AppNexus, Index Exchange, Media.net, Sonobi and Sortable. Cedato warned us the primary challenge that comes with harnessing header bidding at the time was overcoming the issue of VPAID (Video Player-Ad Interface Definition), whereby ads leaving the client side cause a risk of ad delivery failure due to a lack of visibility of VPAID errors. This was apparently a particular hiccup for AppNexus.

As with any report from a technology vendor, we must reiterate that the findings being reported all point back to PubMatic, which offers a sell-side platform to publishers, through which it claims to process 12 trillion advertiser bids a month.

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