Originally posted at VideoNuze, August 17, 2016

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Header bidding has been in the news a lot recently as a new technique for content publishers to optimize their ad inventory sold through programmatic exchanges. Header bidding has now come to video advertising as well, but as usual, there are unique new challenges.

To better understand the issues and how to address them Will Richmond for Video Nuze interview Cedato’s CEO,Ron Dick;

VideoNuze: Why has header bidding been so much in the news recently?

Ron Dick: Last year, header bidding – the new “programmatic kid on the block” arrived. It sounded like a great alternative to the problematic waterfall model that advertisers and publishers had been using. In theory it seemed really promising, offering each impression to multiple demand sources simultaneously and increasing reach by opening the process to as many potential buyers as possible.

VideoNuze: So what’s the problem and what’s specific to video?

Ron Dick: Standard header bidding has its challenges. The basic header bidding implementation runs on the client side and is sending multiple concurrent requests to potential buyers posing an additional load to websites and mobile apps. Things are only getting worse with video, which is making every piece of the puzzle more complex. Loading times are longer, different playback and ad technologies are managed in separate silos, and a myriad of different mobile devices and operating systems require specific adaptation, and moreover, standards are not providing clear transparency on the actual bid price and even if the ad will actually start.

VideoNuze: So are there solutions to these problems?

Ron Dick: Some solutions try to fix these flaws with a patched-up data-driven approach, inserting compromised customizable wrappers, mediation layers or extra code into the video player itself. Other optimization techniques simply pile up multiple ad calls, resulting in time-outs and content load delays that impair user experience. Latency matters get even worse for Outstream video, which plays outside of video content between paragraphs of text.

Some solutions tried to cut latency through ‘RTB-style’ pure server-side optimization, but this led to lack of transparency and a high vulnerability to fraud, especially on mobile. They also decrease the scope of effective demand for publishers. In addition, existing video standard (VPAID) demand authentication to work on the client-side video player. On the client-side alone, standard header bidding for video is particularly prone to creating redundant ad requests that slow down loading times and compromise viewing experience.

VideoNuze: So how does Cedato address the header bidding problems while still leveraging server-side?

Ron Dick: We think the smarter approach here is to do the heavy lifting on the server side, before any bidding takes place, and then leave the “last mile” of yield optimization to the latency-sensitive client-side. We call this approach “Video Header Bidding” and it’s meant to be an open predictive hybrid model that doesn’t create extra standard developments or special creative adaptation. To date Cedato is the only video ad technology developer to truly implement an alternative header bidding process for video on the client and server side, and draws the best from both worlds.

VideoNuze: What’s been your experience so far?

Ron Dick: Customers who have implemented Cedato’s Video Header Bidding have witnessed a tremendous lift for in-stream, in-place and Outstream video ads, resulting in yield and fill rate improvements of well over 50%. Beyond great improvement to video monetization, we’re seeing significant reduction in fraud in mobile and other devices, as well as minimized latency.

VideoNuze: Are there other advantages?

Ron Dick: By being open and working on both sides concurrently, we’re introducing transparency, reducing fraud issues related to source authentication, and enhancing video loading speed. We’re also harnessing the power of big data and analytics to optimize the video bidding process across all devices.

Advanced algorithms calculate predictive optimization to manage an unlimited number of demand and supply sources in real time. We aggregate an unlimited number of demand and supply sources in real time to realize the optimal possible fill rate and yield across all devices. Publishers using the Cedato Publisher Analytics Dashboard have access to statistics and performance, ensuring a transparent and fair process.

VideoNuze: Any predictions for where header bidding for video will go over the next couple of years?

Ron Dick: We’re only seeing the tip of the iceberg with video header bidding, as the whole RTB/SSP model is being shaken. At this stage, this applies mostly to standard pre-roll and mid-roll video ads, which are the bread and butter of most publishers and ad platforms out there. Yet, we expect that native Outstream video will soon take a more central stage, ushering broader optimization models that also take into account actual user engagement and viewability metrics thus making the case for hybrid video header bidding even stronger.