The waterfall worked well in the early days of programmatic – it facilitated the notion of programmatic as a clearinghouse for remnant inventory. Advertisers who set up direct deals with publishers saw available inventory first (all of it, especially the really good stuff) and made the decision to buy or pass. They would usually secure the high-value placements and pass on below the page units, sending those to programmatic exchanges. Most publishers worked with a slew of exchange partners and prioritized them in order of perceived value; if exchange A passed, the impression would pass to exchange B, and with each pass the price dropped.
The role of programmatic has fundamentally changed – selling programmatically is table stakes for most digital publishers who rely on advertising as a substantial source of revenue and it’s no longer conceived as a last ditch effort to secure maximum ad placements on a page. Programmatic demand has evolved too: advertisers benefit from the diversity of the programmatic marketplace and are better at identifying and securing the impressions they predict as valuable to advancing their marketing goals.
In this robust programmatic ecosystem full of advertisers well equipped to buy programmatically and attractive publishers with loyal audiences offering high-impact ad units, the reliance on direct deals and the waterfall is outdated. That’s why header tag has become the phenomenon it has. Publishers who sell through the header open their entire inventory to all possible sales channels simultaneously – buyers who, in the past, would need to wait for an impression to come into their line of sight, can secure high-value inventory that used to be gobbled up by the buyers with direct deals in place.
It’s true that header tag has become a major force in programmatic and we’re here to show you how it’s taken over. For programmatic believers, this is an exciting time to be in the space: header tag is the vehicle to enable true, real-time media valuation and buying, where demand is empowered and publishers can see just how hungry programmatic buyers are for their high-value spots.
Publisher Adoption Of Header Tag Selling Is Steep
From March 2015 to March 2016, the number of publisher domains selling through the header has increased 473.33%. In March 2015, we noticed an uptick in the number of publishers requesting header tag integrations – most were early programmatic adopters who had seen the value of programmatic play out and believed programmatic offered advertisers a better shot at targeting desired users and measuring the effectiveness of their ad spend.
In March 2015, Index Exchange was integrated in the header of 60 publisher domains – at the date of publication, Index Exchange is selling inventory through 344 publisher domains, with a bevy of publishers queued up for integration.
It’s Simple: Header Tag Prices Are Higher Because Inventory Is More Attractive
The industry’s talking a lot about how the prices of inventory sold through the header are higher. It’s true: over the year we’ve monitored header based selling, the average clear prices for header inventory have been higher than tag-based prices without fail. This reality may concern some buyers at the outset, as without an explanation header seems to benefit publishers most at the expense of advertiser budgets.
However, there is a clear reason prices are higher – it’s because header opens high value inventory to buyers. In a tag-based environment, direct deals clear first and direct buyers secure the high value spots at prices negotiated in IO deals. The cheaper stuff is left over to travel down the waterfall until it clears. Thus, the average clear prices for tag-based are significantly lower. When you compare the average price of loafers sold in Bergdorf Goodman to those sold in TJ Maxx, of course Bergdorf’s average will be higher.
How much higher? From April 2015 to March 2016 the average header tag clear price was 218% higher than tag-based clear prices. We saw the biggest differences between the two in May 2015 and October 2015, when header tag clear prices were 306% and 265% higher than tag-based, respectively.
The image below shows which display units are most popular in header tag auctions. Nearly half of all header tag spend from September 2015 to February 2016 went to secure the rising star 300 x 250 sidekick unit, while the leaderboard unit attracted almost a quarter of spend.
CPG Header Buyers Shine in Private Market: Auto, Telecom, and Financial Services Dominate In Open
We looked at which brands have spent most through Index Exchange’s header auctions over the first three months of 2016. Over Q1 it’s been a diverse blend of CPG, financial, automotive, and telecom advertisers. As we’re squarely in tax season, we’ve seen a lot of spend from brands advertising tax services, such as Intuit and H&R Block.
Average clear prices for the top private header buyers are 116% higher than average clear prices in the open market. Within the open market, Fiat Chrysler had the highest clear price, while American Express secured the top spot in the private market.
The top ten open market header buyers spent 115% more than their counterparts in the private market. Most private spend was concentrated at the top of the list, due to Unilever, American Express, and Target. Novartis, the last of the top ten private buyers, spent a sheer 5% of Unilever’s total header spend through the header. Open market spend for the top ten buyers is more normalized – AT&T, the last on the list, spent 54% of top dog Toyota’s total.