What is an advertising waterfall?

A waterfall refers to the traditional programmatic method of ad buying. The waterfall organizes ad sources in a way that is meant to a) yield the highest CPMs for advertisers, and b) increase revenue for publishers.

How does an advertising waterfall work?

In the waterfall, publishers’ ad servers will prioritize the ad networks they work with on any given transaction based on the rates offered for that impression. 

Essentially, an advertiser will first try to sell inventory directly, then if unable to do so, will pass the impression to premium ad networks and so on. Inventory will fall down the waterfall until it ultimately gets sold to the publisher.

How does an advertising waterfall differ from in-app bidding?

A waterfall is associated directly with fixed costs that derive from historical data. In contrast, in-app bidding uses costs that are pulled from real-time data based on how developers are bidding on ads. Through in-app bidding, publishers can offer their inventory in auctions that take place outside of the waterfall, creating an unbiased auction where all buyers bid on the same inventory simultaneously.

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