Header Bidding’s Unexpected Consequence: The Death of the Banner Ad

on The Future of Advertising, Programmatic Native

As programmatic continues to mature, advertisers and publishers are demanding greater transparency both in terms of where their ads are appearing and the openness of auction dynamics. The rising popularity of header bidding (with 69 percent of the top 100 US media properties using some header bidding technology) is perhaps the best illustration of this movement.

Opinions about header bidding’s impact vary wildly. There’s a consensus that it reduces Google’s dominance, but opinions differ as to whether it increases long term publisher revenues, its effect on page latency and whether server-to-server integrations will kill it off.

Outside of these common points of debate though, we’re seeing a less acknowledged side effect: header bidding is hastening the demise of the banner ad by forcing traditional display ads to compete directly with native equivalents.

Banner Ads are No Longer Essential

In header bidding, with all bidders competing against each other in real-time, rather than in the traditional mediation waterfall, different ad formats can also compete for the same ad space.

Publisher ad slots that may have previously only been available for a 300×250 banner ad are now also an opportunity for component based (native) ads. When pushed into a side-by-side auction with display, native is a clear favourite. It offers higher publisher CPMs, generates more attention for advertisers, and also creates a preferable ad experience for users (especially on mobile): the end result being a more sustainable revenue stream for publishers.

Header bidding for native comes at a time where we are seeing increasing liquidity in the market. There’s now almost 100 percent participation in native among major global DSPs and native display is starting to cannibalise traditional display budgets and supply. For example, The Trade Desk recently announced 1,000 percent growth in revenue from native in 2016 compared to a drop in their display advertising.

People prefer consuming video

People are consuming more and more video content, with Cisco estimating that as much as 80 percent of mobile data consumption will be from watching videos. Video is also a huge factor in native’s growth. Being able to combine a powerful visual with a headline and description, auto-playing silently in-feed, has proven to be a potent combination for brands. Native video already accounts for over a third of brand spending on the Sharethrough Exchange and we’re expecting significant growth in 2017.

Unlike display, the market for video ads is supply constrained, leading to significantly higher CPMs. As header bidding’s influence expands in 2017 and DSP support for native video increases, native CPMs and win rates should grow with it.

Less Ads, More (Sustainable) Revenue

The role of an SSP in the native-era is not just short term yield management, it’s also to protect the publisher’s brand — which maximizes long term revenue. This new art of yield management is underpinned by tech that enables “brand safety for publishers” with as much technical sophistication and creativity as brand safety for advertisers — and with more on the line.

The implications are huge. The promise of higher CPMs from less intrusive ads allows publishers to start reducing the number of ads that appear on the page, which in turn creates a better browsing experience for their audience.

The end result; less ad blocking, sustainable revenue for quality journalism, better ROI for advertisers and the end of the banner ad.

This piece was originally published on Video Ad News on January 31, 2017.