Don’t Go Chasing (Mobile Ad) Waterfalls for Mobile In-App Publishing

Header Bidding: Digital media’s favorite phrase over the past few years. While header bidding technology has proliferated primarily around desktop and mobile web, in recent months mobile in-app header bidding, and the unified auction, have been hot topics of industry discussion – and not without reason!

The publishing industry and enterprise publishers are gravitating towards a mobile-first outlook to their businesses as user consumption habits move further away from traditional media sources, and towards mobile in-app consumption. Within this context, these publishers seek to not just build advertising-funded businesses, but rather to build advertising-funded businesses they own, operate and, most importantly, control end to end.

This is in stark contrast to a large part of the mobile in-app publishing landscape in the past decade, where games and apps depended on third-party advertising networks, exchanges and mediation platforms to drive their businesses. In 2018, while large publishers continue to expect third-party platforms to enable their businesses, their expectation from these platforms has pivoted from being solely that of generating revenue.

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Instead, they’re moving more towards building advanced toolkits and technologies that allow publishers to maximize revenue, but also to create a new level of transparency and efficiency – all of which provides publishers a significant long-term advantage.

Why Header-Bidding and Unified Auction Have Started Gaining Prominence

Initially, when programmatic ad buying was still in its infancy, publishers worked with one or a small number of ad networks. As the adtech landscape grew and evolved, publishers added new players to the queue. Eventually, the current “waterfall” model became the norm, with one ad network then another, and then the next one down the line being given the opportunity to bid on available ad inventory. Header bidding addresses the shortfalls inherent in waterfalls.

So How Does a Unified Auction Help with Publisher Goals?

A unified auction is an ‘open’ auction system built to drive a fair, transparent, and wide-as-possible auction for every ad impression a publisher has available, which has multiple implications for enterprise publishers seeking deep control of their businesses.

A Unified Auction Can Help Publishers Maximize Revenue, Sustainably

In-app monetization has been dependent on traditional waterfall-based models, an obviously sub-optimal model for any publisher trying to maximize revenue. However, in-app unified auction immediately and cleanly solves the problems waterfall-based auction models present and there are three main reasons why it is preferred over the waterfall method —

Waterfall In-App Unified Auction
Waterfalls treat buyers unequally and fewer buyers compete for each impression, which leads to reduced competition and inevitably reduces pricing. An open auction treats all buyers equally for all impressions, significantly increasing competition for each impression, and thereby pricing.
Waterfalls use historical average pricing which leads to potentially outdated data driving an auction result. Furthermore, average pricing ignores the possibility that some impressions may be significantly more valuable to buyers than others, which also causes a drop in pricing. Unified auctions use real-time bids from all buyers to designate a winner, immediately removing any inefficiencies associated with historical averages.
Waterfall positions of individual ad networks are often decided through negotiation, wherein revenue shares become entirely opaque to publishers, putting them in a spot of no control. Unified auctions are fully automated, truly open and neutral, providing publishers with greater price transparency in a marketplace.

Overall, unified auction in the desktop and mobile web world has led to a revenue uptick of at least 20% for publishers and, in a maturing market like mobile in-app, the gains could be significantly higher. It’s a no-brainer for any mobile in-app publisher that displays in-app ads.

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Unified Auction Affords Publishers a New Level of Transparency and Control

In traditional waterfall-based mediation platforms for in-app monetization, both the platforms and ad networks reported broad metrics such as average pricing and average fill rates, etc. To publishers, an evaluation of the value of individual user impressions is unavailable, as reporting on hygiene or performance metrics on their inventory isn’t attainable – including viewability scores and fraud metrics.

Additionally, an understanding of individual advertiser composition or their needs is impossible and feedback on ad quality and ad behavior is totally opaque except via sparse user feedback.

A unified auction is built to drive a whole new level of transparency and control. Publishers have full transparency into pricing metrics at a user and impression level, but they also have visibility into the buyer landscape and competitiveness for each impression. With this, publishers can access hygiene and performance metrics and can engage with third-party verification platforms on an in-app header bidding exchange – a difficult option in an ad network and traditional mediation world.

Another crucial advantage of open auction remains that the header bidding platform provider operates under a regime of neutrality with all other demand partners, solving another challenge of traditional waterfalls.

These gains alone can help publishers pivot to an aggressive stance on their monetization and revenue goals and drive direct relationships with ecosystem partners on the demand side.

Also Read: InMobi Expands IAS Integration to Provide Enhanced Viewability Reporting for Mobile

The Way Forward for Unified Auction

While in-app unified auction presents obvious advantages to large and medium-sized publishers, the advantage to the thousands of smaller games and apps on the App Store is yet unclear. Not all mobile in-app demand platforms are set up to support header bidding with their respective SDKs/publisher integrations.

Despite these limitations, header bidding platforms continue to usher this change worldwide, partnering closely with publishers. While multiple versions of header bidding currently exist in the mobile in-app ecosystem, including desktop-first iterations, it’s clear that they are set in the direction of maximum benefit for publishers.

In many ways, in-app header bidding and unified auctions for mobile in-app ad inventory are still in their infancy. But, early adopters have already seen the benefits of such a monetization approach. In the near future, this approach could well end up as the default mobile in-app ad delivery mechanism.

Also Read: Video Header Bidding Lives and Dies with Latency (or Lack Thereof)