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Exchange Bidding vs. Header Bidding

Sortable Ad Ops

Header bidding paved the way for ad publishers to garner more revenue by creating a real-time auction platform that focused on the highest bids rather than ad waterfalls. Google responded to header bidding with exchange bidding, which offers a very similar bidding process.

In this article, we’re going to break down the exchange bidding versus header bidding debate so you can choose the one more suited to your own ad publishing needs.

What Is Header Bidding?

In practice, header bidding is a type of real-time bidding (RTB) that allows publishers to open up their ad inventory to multiple demand partners at the same time. 

Header bidding auctions are held with every page load or any time an ad unit refreshes, which is also something that contributes to website latency — one of the downsides to using this type of RTB.

Publishers, however, stand to earn a lot with header bidding. This is because it opens up the bidding floor to all advertisers — they can compete directly, and the publisher always comes out on top because increased competition drives up the bid prices.

What Is Exchange Bidding?

Exchange bidding, also referred to as open bidding, is another type of RTB auction – one that is fully managed by Google.

That means that Google takes full responsibility for generating bid requests and passing those requests to Google Ad Manager for auction. From there, each bid request gets categorized based on the visitors’ demographics (age, location, gender, etc.), ad type, size, and format. 

How the bid request is presented to interested advertisers depends entirely on the category. This is meant to reduce any complexities or complications of the bidding process between publishers and advertisers.

What Is the Difference between Exchange and Header Bidding?

Both header and exchange bidding have the same goal — to sell ad inventory to the highest bidder, and quickly. Both bidding platforms are made available to multiple demand partners to keep the bidding open and fair. Additionally, both platforms are based on real-time bidding.

However, when it comes to exchange bidding versus header bidding, they both differ in their execution process

Header Bidding Advantages

The three primary advantages that header bidding brings to the table include:

Transparency

It gives publishers complete control over the bidding process. This kind of transparency allows them to oversee the process while also giving them access to the ad’s transaction data. 

With exchange bidding, Google takes over, which masks the entire process. In this case, publishers must accept the amount given to them and do without access to the ad transaction data.

Availability

Applying the header bidding process to your website is as simple as placing JavaScript code into your website header. Once that’s done, publishers can get in touch with demand partners. 

For exchange bidding, publishers must be using one of Google’s modules, such as a DFP or AdX server.

Header bidding auctions are held on client-side platforms which means that the advertisers can access the cookies directly. It is important to note that cookie matching does face challenges such as ad blockers and opt-outs and once third-party cookies are eliminated in 2022, publishers using header bidding will have to rely on a more diverse group of demand partners.

There’s no cookie matching in exchange bidding. While some information is traded during exchange bidding, most of the data gets filtered in the process. So, when it comes to matching with advertisers, exchange bidding comes up short. 

Exchange Bidding Advantages

The three primary advantages that come with exchange bidding include:

Zero Page Latency

Exchange bidding works as a server-to-server bidding process. With server-to-server bidding, there’s no downtime, because the bidding process happens on the server rather than the user’s web browser.

With header bidding, the bidding takes place on the web browser. Unfortunately, this causes web pages to load slowly, making it one of the biggest disadvantages of header bidding. 

No Need for Technical Knowledge

Since Google takes care of the entire exchange bidding platform and process, publishers don’t need to worry about the complicated setup process or bidding management.

Header bidding requires some technical expertise to get set up and manage the platform. Of course, there are header bidding wrappers that help make life easier, but the process still requires effort and know-how.

Direct Payments to Publishers

Since Google handles everything involved with exchange bidding, it also handles the payments. Once ads are bid on and sold, Google sends the money to the publishers’ accounts directly, giving publishers one less task to check in on.

Since header bidding is managed directly by the publishers, they’re also responsible for managing their payments, meaning if the payment doesn’t match the actual bid, they stand to lose out on revenue.

Which One Is Right for You?

One unique thing about both types of bidding is that it’s possible to employ both — and benefit from them.

When you run header and exchange bidding at the same time, you can analyze and compare their results. This is technically the only real way to find out which will benefit you more, especially since the actual results vary from publisher to publisher.

If you’re looking for access to premium demand partners or need help monetizing your site, we can help you with that. Contact us today to learn more about how we help publishers like you strategize and make the most out of their ad monetization.