Publishers get advertising on their sites in a few different ways (this post on the header tag wiki outlines the three primary methods clearly). As an advertising exchange or a digital marketplace for publishers to sell selected inventory to advertisers, Index Exchange connects publishers to the marketplace through tags on the page or through the header tag (i.e. the first line of HTML code on the architecture of a page).
While the majority of advertiser spend within the Index Exchange marketplace is directed to publishers with whom we’re tag-integrated (not header tag integrated), the bulk of publishers selling through a header tag has grown rapidly over the past year (we’re talking scary rapidly). The graph below depicts MoM growth of spend in header-tag auctions during Q3 and Q4 of 2015. We are showing this in relative numbers – December had the most auctions to date and all other months are proportional to December’s numbers.
We’ve studied the implications of header tag in past research. One of the big findings was that header tag creates more yield for publishers and there are a few reasons why. More advertisers are able to bid in a header auction which creates more competition. With more competition, the price of online ad space rises. Another reason yield is higher within header tag auctions is thanks to the quality of the ads sold in such a way: the majority of the premium publishers we work with have switched to the header tag set up.
In Q4 2015 nearly all digital display ad units sold within header tag auctions cleared at a higher price than the same ad units in tag-based. The table below outlines how digital display ad units clear compared to tag-based ad units. Peep the red text.
At this point, it’s old news that header tag ad units clear at higher prices. What’s interesting here are the two outliers – 300 x 50 Mobile Web and 300 x 1050 Portrait. For nearly every unit showed above, header tag trumped tag-based prices. These two were different – the average price of the mobile web unit sold in header tag auctions was only 2.7% higher than those sold in a tag-based environment, while the portrait units cleared higher through tag auctions. Why could this be?
- The two units are at opposite ends of the quality spectrum. The advertising world has complained about the effectiveness of mobile web ads loudly for a long time now. Mobile web units are pretty basic. They are small, so they often render poorly on mobile websites and user engagement is low (aside from those fat fingers who love to engage, of course). Thus, advertisers perceive these units as low quality and the amount of competition we see for these units is pretty stark. In Q4 2015, the average number of bids for the 300 x 50 mobile web unit per auction was two. The portrait unit, on the other hand, is a big unit that sits prominently on a publisher’s webpage. Advertisers value these ads significantly and publishers are selective of the advertisers they allow to purchase this space.
- Mobile web units are sold primarily in the open market. The majority of 300 x 50 mobile web units clear in the open market. While we’ve seen the quality of open market inventory improve over the years, mobile web clears here because it’s remnant. No one really wants it except for the advertisers that are experimenting with display ads on the mobile web. Or those that feel like they need to advertise on mobile because it’s … mobile.
- Portrait unit is high impact creative sold in private markets. These units are under lock and key from publishers. Publishers sell the 300 x 1050 primarily through the private channel. They want complete control over the advertisers to whom they sell the ad and space usually sells at a fixed price.
What to Do About It
As we continue to see normal market effects play out with most other ad units, something needs to be done about these two. We recommend that publishers and advertisers:
- Consider the current value of the mobile web. For some advertisers, the mobile web is important. These advertisers will continue to buy there, and they’ll buy successfully, with little competition. Publishers: you know how important mobile is to advertisers. Work to improve existing mobile units beyond this small canvas and ensure you get full value for the inventory by offering the units within the programmatic market.
- Open high impact creative to controlled auctions. Header tag auctions provide the publisher with a lot of control over the auction and which enables them to provide flexible terms to specific advertisers. The fact that publishers are reserving these units for one or two specific advertisers creates a missed opportunity for publishers and advertisers alike. Publishers should not be afraid to open these units in one-to-many private marketplaces. In one-to-many private marketplaces, you’ll still have control over the advertisers bidding on the space, but you’ll create more competition for the high impact unit. And competition is a cornerstone of a healthy, vibrant marketplace.