Andrew Gerhart, vice president of publisher platforms, InMobi, argues that header bidding could just exacerbate the problems present in the waterfall, and publishers should be looking to unified auctions for a real solution.

There’s a lot of hype right now around in-app header bidding. Facebook announced in early June that they would offer in-app header bidding, while Google said in March they would start beta testing it through AdMob. They, of course, have now joined many others in offering in-app header beading (or at least in looking into it).

If header bidding is so successful in the browser world, then why not apply the same system to apps? After all, approximately 70 per cent of publishers in the U.S. now use header bidding on their websites.

Here’s the problem: in-app header bidding is a hack, and (surprise!) it’s not the best option out there. Yes, in-app header bidding is better than the waterfall-based status quo. But it’s not ideal. Unified auctions, however, are – for both publishers and advertisers.

Understanding the Status Quo
Before we go too far, let’s take a step back and consider what most app publishers use for monetization: waterfalls.

In a waterfall, publishers (or their mediation partners) have a predetermined list of ad networks/agencies/DSPs/etc. they turn to when inventory is ready to be filled, with the order usually determined by historical pricing. The publisher offers everything to the first player in the stack, and then they keep going down the list until all inventory is accounted for, or the opportunity times out.

There are a lot of problems with this setup, which many publishers know all too well. Historical pricing is unreliable and those further down the list don’t get to bid on top inventory even if they can pay top dollar for it, not to mention the whole process can be quite slow to complete. This all leads to diminishing ad returns and a poor user experience, among other issues. Out of this landscape, in-app header bidding has emerged as a potential savior and, for too many app publishers, this promise will go unrealized.

Why In-App Heading Bidding Seems Great – But Isn’t
With header bidding as it’s implemented in browsers, a call goes out to all potential advertisers as soon as the webpage is opened. This call is simultaneous and everyone bids in real time. The best bid wins. It’s as simple as that. No wonder so many are pining to bring this to mobile apps.

So what goes wrong? The problem is that in-app header bidding only involves some – not all – of the advertisers looking to bid on available inventory, and typically the programmatic players. This presents a few key problems.

For one, not only does this typically not replace the waterfall, it can actually exacerbate its issues. Today, the results of the simultaneous call instituted by in-app header bidding are often fed into a waterfall. This means that all of the pitfalls of waterfalls are still very much present. Plus, it can make things even worse when the time needed to conduct the simultaneous call comes on top of waterfall’s time constraints.

It’s important to note the opportunity costs here as well. In most in-app header bidding setups, those involved in the simultaneous call get first look at all inventory – without being charged extra for the honor. Considering that advertisers can be willing to pay up to 100 per cent more than normal for the first impression, giving away access for free is a huge missed opportunity from a monetization perspective.

Unified Auctions: The Way Forward
So, if waterfalls suck and in-app header bidding isn’t much better, than what can publishers do? The answer is the unified auction.

In comparison to in-app header bidding as it exists today, unified auctions bring the full promise of header bidding to the in-app environment. With a unified auction, all available inventory is up for grabs at once and anyone can bid on it. After mere milliseconds, a publisher knows who is bidding on inventory – and that they’re getting the best price possible from advertisers.

It’s easy to see the benefits here for publishers, as they always get the best price for their inventory without sacrificing their user experience. What’s not to love?

Unified auctions benefit advertisers and ad networks too. They gain much more control and transparency over the bidding and placement processes, and they’re never relegated to inopportune waterfall stack placements.

So, why haven’t unified auctions taken off? Well, anyone who benefits from the status quo – especially large, legacy players currently dominating the in-app ad space and those frequently on top of waterfalls – have a lot to lose. But, the benefits of unified auctions for everyone are too great to ignore. It’s time to embrace unified auctions and bring the real, lasting benefits of header bidding to the in-app environment.

Andrew Gerhart is vice president of publisher platforms at InMobi.