By Peggy Anne Salz
One of the top trends in mobile monetization over recent years is a concept that comes with many different names. In-app bidding, also known as mobile header bidding, parallel bidding, or unified auctions, is a model that continues to gain momentum in the mobile advertising ecosystem, albeit at a slower pace than its desktop counterpart. There are a myriad of in-app bidding products available in the market today and PubNative, now part of Verve Group, has compared 17 of them side-by-side while also detailing the history behind the technology.
Before Header Bidding: The Traditional Waterfall
For years, waterfall bidding has been used to sell publishers’ ad spaces to buyers at a certain fixed price. The waterfall model consists of a cascading auction, where prioritization of buyers or ad networks is based on historical eCPM values. An ad request is passed from one ad network to the next in sequential order until the request has been filled. However, this system is outdated and prone to many flaws. These shortcomings — outlined in PubNative’s white paper— include historical and inaccurate eCPM data, a lack of transparency within the waterfall setup, and latency caused by passing an ad request down a stream of partners. The industry has been asking for a more advanced and efficient solution to replace the old waterfall model so that publishers can maximize their ad revenues and increase transparency within the advertising landscape.
How In-App Bidding Works and the Hybrid Setup
In-app bidding stems from header bidding, a method of auctioning ad inventory that originated within the desktop environment. With this model, the unified auction was hosted on the most desired section of the web page (the header) with ad networks competing for ad spaces simultaneously. In both header bidding and in-app bidding, the process begins when an ad request is passed to the server in a real-time auction. As illustrated in the white paper, different demand partners bid on the ad in a parallel auction, competing for the highest bid. This method diminishes the domination of so-called “walled gardens,” allowing all ad networks an equal opportunity to win the bid, while publishers profit from maximizing their advertising revenue.
The adoption of in-app bidding is persistent and most solutions today are hybrid models, which combine the server-side open auction with a client-side waterfall setup. A decision to continue working with the waterfall setup in addition to the open auction is often based on publishers not wanting to miss out on any ad opportunities. As not all ad networks are currently integrated in open auctions, some ad opportunities that are only available in the old waterfall system would be disregarded in a full unified auction setup.
Industry Insights: The In-App Bidding Market
AdExchanger compared Google’s Open Bidding, Amazon Publisher Services’ Transparent Ad Marketplace (TAM), and Prebid, in regard to their desktop header bidding offerings. In PubNative’s white paper, the three players are being analyzed once again, but this time from an in-app perspective. However, the main challenge the three players face is that their offer is not primarily a solution for in-app advertising. This is where mobile-first ad networks come in with their custom-made in-app bidding products.
The number of products on the market is constantly rising as several new in-app bidding solutions have been launched by major ad tech companies in 2020. PubNative’s overview of 17 in-app bidding products from different industry players compares each of them by examining different aspects, such as supported ad formats, bidding ad sources, and whether the auction runs on the server-side, client-side, or with a hybrid model. See an excerpt from the first extensive in-app bidding products comparison below.
What’s Next for In-App Bidding?
In a recent survey of 80+ app monetization and in-app advertising professionals, 38% said they already use in-app bidding solutions. In-app bidding will continue to disrupt the current state of the mobile marketing industry as its usage accelerates. Its greatest benefits come with reestablishing a balance of the value distribution by increasing transparency and fairness for buyers while increasing eCPMs and fill rates for publishers — in short, a more democratized mobile ad tech ecosystem.
Download the White Paper for Detailed InsightsTo find quotes and contributions from industry leaders BidMachine, Coda, Kayzen, Verve Group, Chartboost, andTimehop, as well as a side-by-side comparison of 17 top ad networks and their in-app bidding solutions, download the white paper here