The Rise Of 'Header Bidding' And The End Of The Publisher Waterfall

In recent years, sellers have begun experimenting with a new technology approach that allows exchanges to bring in demand before the ad server call. The technology goes by different names: header bidding, pre-bidding, advance bidding, holistic yield management and tagless integration (even though it requires tags).
To enable it, publishers put a piece of code in the header of their pages, allowing demand sources to submit bids before the ad server callout. This process brings the digital media industry closer to the programmatic idealist's dream. That is, a single unified auction where demand sources compete side by side rather than sequentially, ultimately yielding higher CPMs and fill rates.
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“The ad server has fundamentally not changed much in 18 years, but it is now the most critical piece of the ad tech stack because it’s where the decisioning takes place,” Prohaska said.
In a normal ad server waterfall setup, direct buys go first. Then, publishers allocate inventory to one or more exchanges, using estimates and averages of what each exchange can bring in – not by gauging demand in real time. As the dominant publisher ad server, Google's DoubleClick for Publishers is often "driving the bus" throughout this process.
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One reason programmatic buyers like header bidding is that it allows them to bypass the favorable relationship Google has set up between its ad server, DoubleClick for Publishers, and its exchange, AdX.
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“Dynamic allocation screws the other exchanges because it allows AdX to cherry-pick inventory.”
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Meanwhile competitors are rushing in with their own solutions. Prohaska said four other companies are trying to build a complete publisher stack to rival Google’s: OpenX, AppNexus, Rubicon and AdForm.
http://adexchanger.com/publishers/the-rise-of-header-bidding-and-the-end-of-the-publisher-waterfall/