Prebid

Most news sites make their money from advertising. When someone opens a page, it is decided within a fraction of a second which ad they see and how much the advertiser pays for it. Prebid is a free program that organizes this decision as a real auction. When the page loads, it asks many advertising buyers at the same time what this slot is worth to them, and awards it to the highest bid. The program code is openly accessible and may be used by anyone; it doesn’t belong to any single corporation. Prebid is developed by an alliance of companies from the advertising industry.

Why site operators earn more with it

Before Prebid, the sale of ad slots ran as a queue. The site first asked the most important ad vendor whether they wanted the slot at a fixed minimum price. If they said no, the next one took their turn, then the one after that. This procedure is called a waterfall, because the request falls from level to level.

The waterfall has a costly flaw: order matters, not just price. A buyer in fifth place might have paid twice as much, but is never asked because the slot was already awarded at position two. Prebid eliminates this by having everyone bid at the same time. Publishers often reported significantly higher revenue per thousand ads after switching over.

The power aspect was also important. The largest provider in this market is Google with its ad server, which for a long time claimed the first level of the waterfall for itself. Prebid gave site operators a tool to let Google’s competitors bid at the very same moment. That’s why Prebid regularly comes up in competition proceedings and antitrust lawsuits against Google.

The auction in a split second

The best-known variant is Prebid.js. This is a small program written in the JavaScript programming language that runs in the visitor’s browser. It starts as soon as the page loads and sends the request to a list of bidders. Each bidder responds with a price or declines. Prebid.js collects the responses and passes the highest price on to the site’s ad server, which then delivers the ad.

The process has a time limit, usually between 500 and 1500 milliseconds. Whoever hasn’t answered by then is dropped from the round. This limit is a genuine trade-off: more time brings more bids and higher prices, but slows down page loading. Because many bidders in the browser also cost additional processing power and data volume, Prebid Server exists as an alternative. There, the auction runs on a server on the network, and the browser only makes a single request.

A common misconception is that Prebid is itself an advertising network. It is not. Prebid doesn’t sell advertising and doesn’t earn anything from the auctions. It is merely the technology that organizes competition between other providers. The name Header Bidding comes from the fact that the code used to be built into the so-called header, that is, the head section of the page’s source code.

Prebid on the web and in the industry

As a reader, you never notice Prebid directly, yet you use it constantly. The technology is embedded in a large portion of ad-funded news, sports, and weather sites. Anyone who opens the developer tools in their browser and searches through the loaded code will find a file with prebid in the name on many sites. The technology is now also used in apps and streaming TV.

In business news, the term usually appears in two contexts. First, in quarterly earnings reports from ad tech companies, which cite their position in Prebid auctions as a measure of success. Second, in reports about data privacy, since every request to dozens of bidders distributes information about the visitor. This is exactly what European data protection authorities have been critically examining for years. For students, Prebid is therefore a good example of how an entire market with its own rules lies behind what seems like a simple advertising space.