In-House vs. Outsourced Header Bidding: Key Factors to Evaluate
Header Bidding is a vital part of advertising revenue for most Publishers. Depending on the geography or type of content, having more SSPs competing with Google for impressions can improve the revenue for mid double digit percentage numbers. However, managing the Header Bidding setup requires solid knowledge and resources from Publishers; so many of them outsource this part of the revenue management. The question is, what is the real cost of outsourcing Header Bidding and how to minimize barriers for building and managing demand, thereby increasing revenues?
Possible reasons for outsourcing Header Bidding
There are a few approaches which Publishers regard as non-starters when it comes to building their own Header Bidding setups. Some of them are hard to overcome, as they are independent of the Publishers; whereas others can be more easily resolved.
Lack of scale – doors to SSPs are not open to everyone. They are interested in building and managing relations with bigger players and usually can’t afford to serve smaller Publishers. Of course, some of them are more flexible, while some are quite strict regarding the thresholds. Based on my experience, I can say that the minimal revenue level, one that allows us to think about our own demand, is not less than $25k per month.
Lack of technical resources – Header Bidding requires adops, developers and analysts who can understand the impact of it with regard to the total revenue and the management of optimization processes. Quite often, small Publishers can’t afford to retain such in-house expertise.
Wanting to start simple and fast – for Publishers new to Header Bidding, it often seems smarter to check efficiency with a partner rather than investing in their own solution.
Cost for outsourcing Header Bidding
As in any other industry, there is a direct and indirect cost related to outsourcing. It is important to understand these costs from the perspective of profit optimization.
Cost of the middleman – as always the middleman needs to charge and this is only fair. As an end client you need to be able to monitor this cost and compare it with the investment needed to manage it directly by yourself. Typically, external partners managing such cost charge for such service as a revenue share of around 10 to 20%.
Setup issues – Header Bidding requires monitoring and optimization in order for it to work in the most effective and profitable way. For example – when adding a new ad-format, you add header bidding demand to it so as to be able to evaluate its effectiveness. When you are removing an ad-format from the page, it should also be removed from the Header Bidding, otherwise you are calling SSPs to bid on formats that do not exist, which increase latency and in general badly rank you on the SSP side. In general – the more active you are in your page (like adding or removing ads, or modifying them), the less profitable it becomes for your outsourcing partner to follow your action-plan, as they will need to implement associated Header-Bidding setup updates.
Wrong adjustments – In order to maximise revenues, you must compare bids on the same net level. Google bids are net (their bids equals your money), while some SSP bids are gross (the bid is higher than the paid money). In addition to this discrepancy, you must consider your partner’s margin. Bid adjustment is a method for evening out bid values from the perspective of the Publishers. As an example, if a SSP’s offered bid (gross) is 2$, then we need to deduct approx. 20% as the SSP margin (the real % being the price discrepancy between the bid and the payment) and then 10-20% as the outsourcing partner margin.
After the proper bid adjustments, all the bids are net and only then can they be effectively processed in the auction.
Make sure your partner is offering the adjusted auction because, otherwise, the ad-server will not make optimal decisions andand you, the Publisher, will lose money.
Lowering the barriers
As a Publisher, you know best if the Header Bidding should be outsourced at your company. However, objectively speaking, if you are growing and your Header Bidding revenues have reached a certain level, then it only makes financial sense to manage it in-house. Also, if your main goal is to increase profitability, you should carefully look for the money you can save on cutting out the middleman; and the resources that you will need to have should you decide to take that step.
There are two main sub-solutions that will improve profitability and allow you, the Publisher, to position yourself somewhere between being fully out-sourced and fully in-house.
Signing up with a Wrapper vendor – A wrapper is to Header Bidding what CMS is to content. Having a wrapper allows Publishers to do changes from the user interface without involving developers. In addition, some wrappers add great value, as they come with easy-to-use in-built timeout optimization or actionable analytics, allowing each ad-ops to better understand the Header Bidding’s impact on both revenue and user experience.
Out-sourcing only what you need to outsource – if you are a small Publisher but tech-savvy, you can ask the partner to only rent to you his connections to the SSPs; and you can do the configuration by yourself. In this way you will learn Header Bidding optimization and, by the time you become big enough, you will have been able to switch to your own seats.
On the other hand, if you have your own SSP seats, but you do not have enough resources, you can look for a company which will provide you with management and reporting support only. Apart from the benefit of the efficiency, you will be able to achieve full transparency and direct connections to the SSPs, which is crucial for most businesses, as we have seen in recent years.
QuickWrap is the best solution to move from outsourced to in-house Header Bidding
QuickWrap helps Publishers who outsource Header Bidding management to boost their revenues by BUILDING and MANAGING THEIR OWN DEMAND, in a SINGLE NO CODE TOOL.
QuickWrap allows you:
· To bring your own bidders. Simply plug into the SSPs with whom you have a direct connection.
· To use Yieldbird’s demand. Simply choose the SSPs with whom you would like to connect or test from an extended list of over 30 (and if the SSP you are looking for is not yet proposed, simply ask for it and we will add it).
· To build your direct connections. Should a SSP perform on your domain and you would like to have a direct connection, we will help you achieve this.
· Manage your Header Bidding in a single, no code wrapper: QuickWrap was designed for simple, intuitive and friendly usage
And, should you need support in your transition, you can request any support (in your setup, trouble shooting or Header Bidding optimisation) to Yieldbird through QuickWrap, benefiting from our extensive skills and experience with adops, analytics, data science or developers.
QuickWrap = less intermediaries & more money.
Want to know more?
CEO & Co-Founder
