Advertising Guest Columns
4 mins read

What are the benefits of server-to-server header bidding?

Programmatic advertising has transformed the way publishers monetize their ad inventory, but there are numerous tech solutions to mull over, not least whether the solution will be client-side or server-to-server, and whether the solution will be bought in or built from the ground up. Daniel Ayinde of PubMatic explains more and outlines the optimal way forward for publishers.

Over the past decade, technology has transformed the way publishers monetize their advertising inventory, not least by creating unified programmatic bidding. Today, many publishers rely on multiple demand partners to maximize yield, and as a result, there is a need for technology solutions that streamline the management of those solutions.

When multiple technology solutions work together, there needs to be a way that they can communicate with each other. The two main ways are (a) client-side (e.g. calls go directly to a website or app), and (b) server-side, where two or more servers communicate directly with each other. The server-to-server approach offers many advantages to publishers, advertisers, and consumers. From a bidding perspective, the server-to-server approach reduces latency in the bidding process which is a key driver of faster load times and improving auction efficiency.

Functional improvements

In the digital world, publishers are the gatekeepers of the functionality of advertising, brands are the gatekeepers of ad budgets, and consumers are the gatekeepers of their attention. Maximizing the proportion of budgets awarded to any given publisher requires ensuring that the functionality the publisher provides to the buyer best meets brands’ requirements while also providing consumers with the best possible content, including advertising.

Server-to-server header bidding offers publishers the opportunity to improve page load times compared to other ad delivery methods. The server does the heavy lifting outside of the publisher’s web domain or app.

This improves the browsing experience, minimizing the risk of time-outs and declining audiences. Additionally, when ads load faster publishers can refresh ads more frequently effectively increasing the inventory they have available to monetize.

How to get started and the importance of testing

For publishers that are currently only using client-side solutions, the first step towards a server-to-server approach should be finding a partner that enables you to test each approach side by side in a transparent, measurable way.

The exact set-up of the server-to-server approach will differ for each publisher depending on the inventory that is available (display, video, CTV, desktop, mobile etc.) as well as the existing technology stack and performance of direct vs. auction-based sales. When evaluating different solutions, it’s essential to consider a range of metrics including eCPM, fill-rate, cookie matching, and of course latency. These need to be prioritised according to your business goals and each set-up tested should be evaluated against the same criteria.  

When looking for a server-to-server technology partner, it’s important these providers understand your objectives, so be clear about what you want to achieve from both a commercial and technical perspective. Technology works best when both sides are pulling in the same direction; make sure that both your commercial and technology teams are clear about the opportunities and the risks to their respective goals. 

Buy vs. build

As with other technology solutions, publishers have two options available: buy or build. The advantage of building an in-house solution is that it can be totally custom to your needs, which in theory, should maximize yield. We’re seeing more publishers in the US taking the build route compared to Europe. The feedback we hear from publishers is that this is mainly driven by the fact that operating across multiple markets (i.e. Europe) increases the technical load and resources required to build the solution.

Given that building a server-to-server solution requires extensive technical expertise, takes time, and requires ongoing maintenance and development as other integrated solutions e.g. identifiers evolve, managed service partnerships alleviate these issues. However, publishers should always ensure that there is adequate, in-market support, and look for solutions that offer a flexible approach.

Hybrid solutions and third-party cookies

Generally speaking, client-side solutions offer higher cookie-matching rates which is an important consideration, especially given the rise of retail media which will continue to be cookie-dominated. In contrast, server-to-server solutions produce better results for video ads due to the speed required. These two trends point to the need for hybrid solutions.

Furthermore, with continued delays to the removal of cookies in Chrome, the movement towards independent IDs is not happening as fast as it may have been. This means that publishers need hybrid solutions that cater to cookie-based behavioral targeting, contextual targeting, and contextual targeting combined with ID solutions.

The digital advertising world remains in a state of flux and all parties need to remain prepared for significant change while building solutions that work for today’s ecosystem. In order to do this most effectively we need to facilitate industry-wide conversations, and feedback, and develop collaborative approaches to understand the direction in which media buying is moving. This will help build the best technology solutions for today and tomorrow.

Daniel Ayinde
Associate Director, Publisher Development, EMEA, PubMatic

PubMatic, Inc. (Nasdaq: PUBM) is an independent technology company maximizing customer value by delivering digital advertising’s supply chain of the future. PubMatic’s sell-side platform empowers the world’s leading digital content creators across the open internet to control access to their inventory and increase monetization by enabling marketers to drive return on investment and reach addressable audiences across ad formats and devices. Since 2006, our infrastructure-driven approach has allowed for the efficient processing and utilization of data in real time. By delivering scalable and flexible programmatic innovation, we improve outcomes for our customers while championing a vibrant and transparent digital advertising supply chain.