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In-App Bidding

What Is In-App Bidding?

Just as any technological field experiences moments of calm before waves of innovation, the realm of in-app advertising had its tranquil period known as the waterfall era. During this phase, app publishers prioritized demand sources based on historical data about estimated cost per thousand impressions (eCPM). For a considerable time, the waterfall approach dominated in-app advertising. However, modern advertisers and publishers have recognized a more optimal solution: in-app bidding.

Defining In-App Bidding

In-app bidding represents an advanced advertising strategy where mobile publishers auction their ad inventory, leading to a simultaneous bidding competition among all their advertisers. This heightened competition results in significantly higher prices (CPMs) earned by the publisher compared to alternative methods.

A Familiar Idea

In-app bidding isn’t an entirely new concept; it’s essentially the application-oriented version of header bidding, a desktop technology in operation since 2015. Header bidding enabled web publishers to partner with third-party header bidding providers and insert code into a web page’s header. This code allowed these providers to access multiple ad exchanges, which could then bid at the same time on a publisher’s inventory. Consequently, header bidding ensured publishers secured the best price for each impression, with the highest bidder among advertisers winning the impression.

Adapting to Mobile

Until recently, mobile apps lacked a bidding mechanism, even though our predominantly mobile-centric world required a model that optimizes CPMs for publishers, similar to header bidding’s impact on the web. Technical barriers and the absence of distinct headers within apps hindered the widespread adoption of such a solution on mobile platforms. However, these technical challenges have now faded away, marking the beginning of the in-app bidding era.

In-App Bidding Advantages Over Traditional Waterfall Monetization

Despite its programmatic nature, in-app bidding differs from conventional programmatic methods, often known as the “waterfall.” In the waterfall approach, publishers’ mediation platforms prioritize ad networks based on past rates for a particular impression. In contrast, in-app bidding enables publishers to present their inventory in auctions beyond the waterfall framework. This allows various ad networks to bid simultaneously on the publishers’ inventory, ultimately securing the highest achievable CPM.

In-app bidding effectively reduces fragmentation among demand sources by allowing all advertisers to bid on ad impressions from multiple sources at the same time. Conversely, this means that several advertisers gain insight into a given publisher’s inventory, thus increasing yield for the publishers. Essentially, this democratized advertising solution benefits both advertisers, who access more publisher inventory, and publishers, who make their inventory available to a wider range of advertisers.

Revolutionizing Impressions Competition

In-app bidding transforms the competition for impressions by enabling advertisers to compete in real-time, free from a hierarchical structure of demand partners. This empowers publishers to consistently achieve the highest CPMs for their inventory. By eliminating the constraints of averages and allowing individualized assessment of each bid, the highest bidder consistently wins the impression. This increased competition among advertisers further boosts CPMs, providing significant advantages to the mobile gaming industry.

Embracing the Potential of In-App Bidding

Beneficiaries of In-App Bidding

In a nutshell, everyone involved in the mobile gaming industry stands to benefit from the emergence of in-app bidding. Publishers experience increased revenue, advertisers access a broader inventory range for better cost attribution, and consumers encounter more relevant ads.

For publishers, in-app bidding offers three main advantages:

  1. Increased Demand: The mechanism increases the demand for ad inventory as multiple demand sources bid on each impression, driving CPM and Average Revenue Per Daily Active User (ARPDAU) higher.

  2. Total Transparency: All demand sources are treated equally, fostering a fair bidding environment for each source.

  3. Enhanced Efficiency: In-app bidding eliminates manual management and continuous optimization, operating fully automated. Every demand source has an equal chance to bid, consistently yielding maximum revenue. This automated buying process expedites the shift from historical to real-time pricing.

In essence, in-app bidding emerges as a transformative force, reshaping the landscape of in-app advertising and providing multifaceted benefits for all stakeholders.

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