Header bidding is a technological solution in programmatic advertising which was developed as a response to the traditional waterfall model.
The waterfall model brings together ad networks in a serial connection.
Waterfall works like this- Firstly, the opportunity to place ads is given to the network with the highest priority. If first network does not fill the ad slot than the opportunity is given to the next network and so on.
The main advantage of header bidding is that it gives the opportunity to a potentially unlimited number of networks to compete for every impression simultaneously, which results in higher CPM rates and more profit for web publishers.
2 very different implementation approaches are present - client side (for example prebid.org) and server side (Google Exchange Bidding). The main disadvantage of client side header bidding is that it can cause latency and it is not currently supported by all relevant Ad Exchanges. Server side header bidding relies on ad server technology which is great performance-wise but can compromise the basic idea of equal approach for every bidder.