Programmatic · also called pre-bidding, advance bidding
Header bidding
Header bidding is a technique where a publisher offers each ad impression to many SSPs and exchanges simultaneously before calling its ad server, so all buyers compete at once.
Before header bidding, publishers sold programmatic inventory through a waterfall: offer the impression to one partner at a time, in a fixed order, and move down the list if nobody bought it. That left money on the table, because a partner lower in the list might have paid more, and it gave Google's AdX a privileged position through dynamic allocation.
Header bidding, which spread around 2014–2016, fixes this by running an auction in the page (originally in the HTML "header") before the publisher ad server is called. A wrapper, most often the open-source Prebid library, asks several SSPs for bids at the same time, waits until a auction timeout, and passes the best bid into the ad server, which compares it with direct campaigns and other demand.
Header bidding raised publisher revenue and competition, but added page latency and many more bid requests. Server-side header bidding moves the auction to a server to reduce the load. The same idea powers in-app bidding in mobile apps.
Think of it like this
Header bidding is like asking every car dealer for a quote at the same time instead of visiting them one by one and accepting the first acceptable offer.
An example
A recipe site runs Prebid with six SSPs. Bids come back at US$1.20, US$1.85 and US$2.40; the US$2.40 bid is sent to the ad server, where it beats an AdX bid of US$2.10.
Related terms
Prebid
Prebid is the most widely used open-source header bidding software, including Prebid.js for websites, Prebid Server for server-side auctions and Prebid Mobile for apps.
Waterfall (daisy-chaining)
A waterfall is an older way of selling ads in which an impression is offered to demand partners one at a time, in fixed priority order, until one fills it.
Server-side header bidding
Server-side header bidding runs the header bidding auction on a remote server rather than in the user's browser or app, reducing page weight and latency while connecting to more bidders.
Unified auction
A unified auction is a single auction in which all demand sources, such as direct campaigns, header bidders and exchanges, compete for an impression under the same rules at the same time.
Auction timeout
An auction timeout is the maximum time an auction waits for bids; responses that arrive after it are ignored, even if they would have won.
Sources: Prebid documentation