What Is In-App Bidding?

How Does In-App Bidding Work?

In-app bidding is possible when a publisher integrates the software development kit (SDK) provided by an in-app bidding platform in their mobile app. The SDK facilitates communication between the bidding platform and demand sources and enables the auction process to take place within the publisher’s app.  

Once a mobile header bidding solution has been integrated into the app, it is ready to send ad requests and receive bid requests from various demand sources, including ad networks, DSPs, and ad exchanges. 

These ad requests have information about the ad placement, such as ad format and audience. The demand source submitting the highest bid – the highest CPM – wins the ad impression.

As in-app bidding starts to gain more traction in the programmatic advertising space, the next step is to boost competition between demand sources and diversify ad formats, so that the technology constantly improves.

What Are the Benefits of In-App Bidding?

Most ad mediation platforms by default comprise a mix of in-app bidding and waterfall mediation. App publishers are, however, moving away from waterfall bidding solutions, which they have prioritized over mobile heading bidding for the past years. 

This transition to in-app bidding has possibly been slow due to some networks only being available in waterfalls and general industry hesitancy to test performance over longer periods when removing waterfall mediation. Some monetization managers may also feel as though they have greater control while maintaining manual waterfall placements.

Waterfall mediation is, however, based on historical data, rather than real-time data and is therefore now more commonly regarded as flawed. Publishers are now coming round to the following benefits that in-app bidding offers:

1. Greater Revenue

One of the most important reasons publishers opt for in-app bidding is to maximize their ad revenue. This is due to an increased competition among sources compared with waterfall mediation, as these demand sources want to bid high enough to win ad placements.

This form of bidding also facilitates diversified and stable earnings for publishers. If one demand source underperforms, there will be others to counteract this negative impact on revenue.

2. Fairness

Publishers will often mention that waterfall bidding lacks fairness, as the highest bid doesn’t always win and these bidding partners can therefore not compete for the inventory. The auction is therefore seen as fixed.

In-app bidding, however, eradicates this unfairness by ensuring the highest bid always wins. This method of programmatic advertising is therefore considered far more democratic, as all inventory buyers are given equal access to ad space. 

There is also greater diversity regarding demand sources – and end users can enjoy this greater diversity of ads.

3. Transparency

Transparency is also one of the benefits that in-app bidding has to offer  publishers. They can more easily gain insights and understanding into what partners are willing to pay for ad inventory and are subsequently able to set more competitive prices. 

Waterfall bidding, on the contrary, often only allows publishers to view the value of the bids after the auction has concluded.

4. Greater Efficiency

In-app bidding tends to be easier for publishers to integrate, monitor, and adjust – it doesn’t need many resources. 

This is compared with the tediousness of setting up waterfalls and manually managing and optimizing each demand source. Mobile header bidding therefore gives publishers more time to spend testing new monetization strategies, creating new apps, and other important activities with higher impact.

Selling and buying inventory through this method also reduces latency, as the auction happens at a faster pace.

Conclusion

For many publishers in the mobile adtech space, mobile header bidding has become an extremely attractive alternative to waterfall bidding. This is due to in-app bidding’s reputation as fair, transparent, efficient, and lucrative. Selling ad inventory this way brings in greater revenue, as bid prices are typically more competitive.

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