In this article, we’ll look at the difference between Google Adsense vs header bidding. We’ll also explore some common questions publishers have when deciding which option is best.
8 April 2021
What is AdSense?
Google’s AdSense enables website owners to monetize their websites by serving ads. Website owners install a small piece of code on the site and select the spaces they want ads to appear.
Adsense is easy to use as it reduces the manual input required from the publisher. Criteria such as ‘ad size’ and ‘ad placements’ can be automatically taken care of by using responsive ad units.
Once AdSense is live, advertisers bid on the new ad space based on the website visitor’s profile. After an ad is served, AdSense bills the advertiser and pays the website owner per-click or per-impression.
Almost all publishers use AdSense when they start monetizing their sites. It’s easy to use, flexible and usually provides high-quality ads that match the website’s content.
What is header bidding?
Header bidding is a tool that enables website owners to access many advertising demand sources at the same time. These demand sources could be supply-side platforms (SSPs), ad networks or ad exchanges. These demand sources compete in a realtime bidding environment like an auction.
The auction environment forces advertisers to bid against each other which increases the value of the publisher’s ad space or cost per mile (CPM). This results in increased revenue for the publisher.
Header bidding is complex to install and should be undertaken by a developer or an ad technology company. If you’d like a detailed header bidding breakdown check out what is header bidding.
What's are header bidding demand sources?
An SSP is a programmatic technology that publishers can connect with in order to sell their inventory to buyers and earn revenue. The SSP makes the inventory available to buyers via ad exchanges, demand side platforms (DSPs), agencies, or directly.
An ad network is a technology that bundles publisher inventory based key criteria like demographics. Buyers submit their target criteria to the ad network, and the ad network matches their request to the available inventory.
An ad exchange is a digital marketplace that allows advertisers and publishers to buy and sell advertising space. This often happens through real-time auctions. Ad exchanges are most often used to sell display, mobile and video ad inventory.
What's the difference between AdSense and header bidding?
AdSense is one of the advertising demand sources that can be accessed in a header bidding auction. When a publisher uses AdSense only, they can access a limited pool of advertisers in the AdSense ad network. When a publisher uses header bidding, they can access a much broader range of advertisers. This includes the AdSense ad network and other ad networks like AppNexus and Amazon. These ad networks compete directly, increasing the bid value for each impression.
A Duke University study found that header bidding increased ad revenue for web sites by 28% compared to real-time bidding.
How do you choose between AdSense and header bidding?
There are many factors to consider when choosing between AdSense or header bidding. If you are researching header bidding then there’s a good chance that you already have (or had) Adsense live on your site. While header bidding seems like the best option to generate more revenue, there are pros and cons to both solutions. While header bidding increases ad revenue, AdSense offers more automated ad serving features.
Here’s a detailed list of what to look for:
Do you serve more than 1 million impressions per month? Is your advertising revenue above $1000 per month? If so, header bidding might be a good option for your site.
Header bidding technology requires heavy traffic to be effective. This allows the new demand partners to learn the traffic patterns of the site and optimize their bids to match.
If 80% or more of your audience is based outside of tier 1 and select tier 2 Geos (i.e. based outside of the USA, Canada, EU countries with a large economy and Australia), AdSense is probably a good choice. Top header bidding ad networks and SSPs like AppNexus often only work with advertisers in tier 1 and select tier 2 locations. In tier 2 and 3 Geos, AdSense performs well as it is more commonly used by many local businesses.
There is a common misconception about header bidding and page speed. Is header bidding slower than Adsense? The answer is always yes. Does this latency have a negative impact on revenue? Usually header bidding increases revenue but it depends on your website’s setup.
Header bidding integrations usually run asynchronously. This means your page content will load separately to your ad units. While you might imagine this would result in lower revenue or CPMs, the opposite is true. The header bidding auction takes 500-1000 milliseconds to provide access to a large selection of demand partners. This usually increases the yield per impression.
A good header bidding setup can be adjusted for speed. By using only a small set of top demand partners for a site, the auction time can be reduced. Adding too many demand partners will increase latency as it requires more time for bids to be submitted.
The timeout or deadline for demand partners to provide a bid can also be set up for speed. By introducing a fast timeout (say 300ms) you can end the auction early, giving the impression to the advertiser who bid the most at that point. The downside of the fast timeout is that you will receive less revenue as some demand partners won’t have a chance to bid before the auction ends.
Click-through rate (CTR)
AdSense is the only ad network that provides revenue based on the number of clicks. Header bidding provides revenue based on the number of impressions.
AdSense revenue can be calculated as follows:
Page impressions x CTR x CPC
For example: 10,000 x 0.05 x 0.8 = $4
In our experience, if the CTR of your ad unit is at or below 0.5% header bidding will outperform AdSense. If the CTR is 1% or more, there’s an 83% chance that AdSense will outperform header bidding. So overall, header bidding works best on units with a low CTR and AdSense works best on units with a high CTR.
Website owners can run AdSense and header bidding together. AdSense can be connected to ad units with a high CTR. Header bidding can be connected to units with a lower CTR. This will maximize the revenue generated by these ad units.
Header bidding - additional revenue generation solutions
The header bidding technology stack provides access to a range of solutions that AdSense doesn’t cover. As of March 2019, 79.3% of the USA’s top 1,000 sites use header bidding.
AdBlock Revenue Recovery
25.8% of US users use an ad blocker. This leads to significant amounts of lost revenue. By using adblock revenue recovery or anti-adblock, publishers can show select, high-quality ads even when an adblocker is being used.
However, not all adblock revenue recovery solutions are the same.
Publishers with under 10 million page impressions can apply to be whitelisted by AdBlock Plus. If they are successful they will need to pay a fee to be able to show ads compliant with the Acceptable Ads standards. Acceptable Ads comply with strict placement, distinction and size criteria. Video ads and animated ads are not compliant with the Acceptable Ads standards.
Small publishers can also apply to be whitelisted by AdSense. AdSense does not distinguish between text, video and animated ads. This means a publisher can only show text ads, compliant with the Acceptable Ads standards, on the site. The publisher will lose the ability to show video and animated ads. The result of this is a 50%-70% decrease in revenue as text ads generate less revenue. For this reason, most publishers do not apply to be whitelisted by AdSense.
Header bidding allows publishers to scan and filter ads shown to users. This means publishers can show Acceptable Ads to AdBlock users and show video and animated ads to non-AdBlock users. This allows publishers to maximize revenue.
Time-on-site is a massive asset for publishers. If your audience is spending 3 minutes or more on your site, you can use SmartRefresh to gather more impressions. SmartRefresh, enables website owners using header bidding to serve new ads when an ad unit is in view without reloading the page. This refresh uses more than ten user events such as scrolling, content rendering, timing and browser tab activations to determine when to trigger the refresh.
Before SmartRefresh, many websites used a blanket refresh. This refresh was triggered regardless of whether the ad units were not in view or not. The result was lower CPMs as advertisers did not want to pay money for an ad that users didn’t see. When a blanket refresh triggers it only receives around 10% of the first impression’s value. With SmartRefresh, publishers can get 50%-80% of the first impression’s value.
Setting up a SmartRefresh requires in-depth knowledge of Google’s policies and the advertising technology landscape. Not all SSPs allow websites to run a SmartRefresh and Google requires websites to declare which units are being refreshed. Contact Snigel’s support team if you’d like to find out more.
Header bidding websites are now rapidly switching to SmartRefresh as it can provide a 30%-120%+ increase in revenue from longer duration visits. AdSense does not have a SmartRefresh function.
The final factor to consider when choosing between AdSense and header bidding is technical support.
Google famously provides a low level of technical support to publishers unless they are very large. By partnering with a header bidding company you will usually get access to a team of ad ops professionals that will optimize your ad setup.
A good ad ops team will run A/B tests on ad placements and connect you with new advertising technologies as they emerge. They will also find high-earning private marketplace (PMP) deals to match your site.
If you’d like to find out more about header bidding and how Snigel’s ad ops team can increase your revenue, contact us here.