Header Bidding vs. RTB: Two Sides of the Same Coin? 

In the AdTech industry, it’s common to encounter the term RTB (real-time bidding), and you’ll often hear about header bidding in the same conversation.   

However, many people mistakenly use these terms interchangeably, leading to some confusion. The truth, though, is a bit more nuanced.  

This article will explore the distinctions between header bidding and RTB. By the end, you’ll understand how these concepts relate and where they differ, allowing you to navigate the programmatic advertising industry better. 

Header Bidding vs. RTB In-A-Nutshell

What is Real-Time Bidding (RTB)? 

Real-time bidding (RTB) is a system popular within the AdTech niche that lets advertisers bid for ad space on websites or apps the moment someone visits them. Advertisers automatically compete to get their ad shown when a user loads a page. The highest bidder wins, and their ad appears right away. 

What makes RTB great is how fast and automatic it is. In the old days, advertisers had to manually negotiate for ad space, which took time and was only sometimes efficient.  

With RTB, it happens in seconds, and advertisers only pay for the exact ads they win. It’s a way for them to get their message in front of the right people at the right time without wasting money on people who aren’t interested.  

Advertisers love RTB because they can target their ads based on your characteristics, such as your age, location, or interests. Publishers (the sites or apps hosting the ads) benefit, too, as they always get the best price for their ad space.  

While there are other ways to buy digital ads, RTB is one of the most popular because it’s quick, easy, and helps advertisers maximize their ad budget. 

How Does RTB Work? 

Real-time bidding (RTB) involves several key parties: advertisers, publishers, SSPs, DSPs, and ad exchanges.  

Here’s a simple breakdown of what these terms mean:  

• Advertiser – The company or brand that wants to place an ad online.  
• Publisher – The website or app owners who sell ad space on their platforms.  
• Supply-Side Platform (SSP) – Publishers use SSPs to show their available ad spaces and set prices. This software helps them automatically sell these spaces in real-time. SSPs give publishers control over their ad inventory and connect them to buyers. 
• Demand-Side Platform (DSP) – Advertisers manage their ad campaigns using DSPs. This software allows them to bid on available ad space and ensures they only bid on ads that meet their targeting criteria. 
• Ad Exchange – A digital marketplace where SSPs and DSPs meet. It’s where the auction happens, and advertisers compete for ad space in real-time.  

An ad request is sent out when someone visits a website or app connected to an SSP. The SSP lets the Ad Exchange know that ad space is available, along with info about the user (based on consent) and the publisher’s requirements (like the type of ad and price).  

Next, the Ad Exchange sets up an auction for advertisers. DSPs use automated algorithms to decide whether to join the auction and how much to bid. The highest bidder wins the spot, and their ad is instantly shown to the user—so fast that the user has no idea an auction just took place in the background!  

In short, advertisers set their bids on DSPs, and publishers decide whether to accept those bids through their SSPs. 

What is Header Bidding? 

Header bidding is a model that helps publishers sell their ad space by gathering multiple bids at the same time from various sources, such as ad exchanges, ad networks, demand-side platforms (DSPs), and supply-side platforms (SSPs). It offers an alternative to the old-school waterfall method, where bids are processed one at a time. 

You might hear header bidding mentioned alongside real-time bidding (RTB) when discussing programmatic advertising. Although they aren’t competing technologies, header bidding is actually a subset of RTB, which just means it’s a specific approach within the larger RTB framework. 

Also, while header bidding is a popular method, it’s not the only one within the RTB category, and RTB itself is just one aspect of programmatic advertising.  

Not every programmatic ad solution uses header bidding, and some companies, like Sevio, specialize in real-time bidding solutions that focus on the core principles of the Open RTB protocol. 

How Does Header Bidding Work? 

Understanding what came before header bidding is important for a clearer picture of how it works. 

When RTB first appeared, auctions followed a waterfall model. In this approach, bids were placed one after the other, meaning only after the first advertiser’s bid was processed could the next one enter, and so on. 

For instance, a publisher might set a price floor at $2.50. In the first auction, the highest bid might be $2, which doesn’t meet the floor, so the inventory moves to the next auction. The next exchange meets the price floor with a $2.75 bid, so the ad space is sold. 

But this process often meant missing out on better bids that could have come from later rounds, leading to lost revenue for publishers. 

Header bidding was created to solve this. Instead of handling bids one at a time, header bidding allows publishers to show their ad inventory to multiple exchanges simultaneously. This ensures publishers can maximize their revenue by getting the highest bid in real-time rather than waiting for each bidder to go in sequence. 

As an example, a publisher sets a price floor of $3 for its ad space. In the older waterfall system, if the first buyer bids $2.50, the floor isn’t met, so the ad inventory would move to the next buyer.

The second buyer might bid $2, still below the floor, so again, the bid is rejected. A third buyer bid $2.75, which is still not enough. Then, a fourth buyer comes in with a $3.25 bid, which meets the floor, and the ad is sold. 

With header bidding, instead of going through each buyer one by one, all buyers are asked to bid at the same time. This way that $3.25 bid would win immediately without the publisher missing out on potential revenue by waiting for the highest offer. 

Header Bidding vs. RTB: What’s the Difference? 

Header bidding and RTB are closely related because header bidding is actually a subset of RTB, but they do not compete directly with each other. 

Just as RTB revolutionized programmatic buying by introducing real-time auctions, header bidding improved on RTB by allowing simultaneous bids from multiple sources. 

In simple terms, RTB was the next step after manual ad buying, and header bidding took it further by eliminating the inefficiencies of the waterfall method. 

So, while RTB is the broader concept that transformed how ads are bought and sold, header bidding is a specific, more efficient way to run those auctions, increasing both the speed of the process and revenue for publishers. 

Is Header Bidding the Same as Exchange Bidding? 

No, not really. Exchange bidding and header bidding are two methods used in programmatic advertising to boost ad revenue. Still, while both methods revolve around auctioning off ad space, they differ mainly in where the bid request originates. 

Exchange bidding is a server-side solution provided, for example, by Google Ad Manager (GAM). It allows publishers to link their third-party demand sources to compete alongside Google’s own demand. This setup enables multiple ad exchanges to bid simultaneously on an ad impression, often resulting in higher CPMs. 

Header bidding, on the other hand, is a client-side auction that gives publishers more control and flexibility over their ad inventory. By connecting various ad exchanges or demand-side platforms (DSPs) directly into their website’s header, publishers create a competitive space where multiple bidders vie for the same impression, potentially driving up CPMs thanks to the higher demand. 

Header Bidding vs. RTB: Final Thoughts

So, even though RTB (real-time bidding) and header bidding are often discussed together, they’re not the same thing, but they do work together.  

RTB changed the game by allowing ads to be bought and sold in real-time through auctions, while header bidding took it a step further by letting multiple buyers bid simultaneously, which helps publishers make more money. 

Now that you know the difference between the two, you can see how they complement each other.  

Understanding how they fit into the bigger picture of programmatic advertising will help you make better decisions and get the most out of your ad campaigns, so congrats, now you know something new that just a few really understood for real!