What Is In-App Bidding?

How Does In-App Bidding Work?

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

Once the 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. When it comes to in-app bidding, the demand source submitting the highest bid – the highest CPM – wins the ad impression.

As this method of programmatic buying starts to gain more traction in programmatic advertising, the next step is to boost competition between demand sources and diversify ad formats, so that the technology constantly improves.

What Is the Difference Between In-App Bidding and Waterfall?

App publishers are moving away from the waterfall bidding model, which has been in use for the past years. This programmatic method of serving ads in a publisher’s app is based on historical data, rather than real-time data and is therefore seen as flawed in the adtech space.

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 it is the higher bids that win.

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

2. Fairness

When talking about mobile header bidding, publishers will often mention that lack of fairness in waterfall bidding, 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, on the contrary, 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 when it comes to demand sources.

3. Transparency

Transparency is also one of the key reasons in-app bidding is becoming more popular among publishers. They can more easily gain insights and understanding into what partners are willing to pay for their 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

Compared with the tediousness of setting up waterfalls and manually managing each demand source, in-app bidding tends to be easier for publishers to integrate, monitor, and adjust – it doesn’t need many resources. This gives publishers more time to spend testing new monetization strategies, creating new apps, and other important activities with higher impact.

You can also reckon with reduced 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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