What is a waterfall in mobile advertising?

A waterfall in advertising is a method of prioritizing ad networks to maximize ad revenue. A publisher, or more commonly a mediation platform, ranks ad networks using estimated cost per mille (CPM) based on the historical performance of the platforms. If one network isn’t performing well, or is unable to sell the ad inventory fully, there are backup networks in place to ensure the ad is still getting impressions.

Let’s say you have created your ad and you’re ready to publish it to inform your audience of your offering. You connect with a mediation platform, and request that your ad is displayed. Here’s what that mediation process looks like (while you sit back and relax!):

1. The mediation platform pulls together a list of networks that they work with.
2. With relevant criteria for the audience you are looking to target in mind (age, device, operating system, etc), the mediation platform looks at historical CPMs for the networks.
3. Accordingly, the mediation platform sets up a waterfall with the highest CPM at the top, waterfalling down to the lowest CPM.
4. The network at the top of the waterfall will aim to sell the ad inventory in full. But, if they’re unable to, they’ll pass the remaining inventory to the next network in the waterfall (and so on) until the inventory is fully sold.

It’s also useful to note that since historical performance can only provide an estimation of actual performance and CPM, mediation platforms can set a minimum CPM requirement for each network. In this instance, the network would only display the ad if they are able to achieve (or improve upon) the provided CPM.

Using waterfall ads help with:

• Using multiple network partners to fill ad space and not lose out on revenue.
• Improving CPM to maxmize revenue.
• Minimizing the number of SDKs you need as an advertiser to just 1 - that of the mediation platform.

Specifically, using a waterfall mediation platform saves developers a lot of time and hassle. Rather than managing each individual ad platform to maximize ad revenue and needing to integrate multiple SDKs to accommodate each network, the mediation platform and waterfall does the work for them.

While waterfall advertising was the go-to prioritization method for many years, many advertizers are moving away from using waterfall alone due to its downfalls. Some of the cons to using a waterfall include:

• CPMs are estimated when creating the waterfall, so there may be a more optimal way of ranking advertisers based on true CPMs.
• The waterfall ranking is a fixed order, so if a lower ranking network is willing to bid higher to get the ad inventory before a top ranking network, they are unable to do so.
• Because of this potential to not get a fair shot at the inventory, a network may have a skewed historical price that is not a fair representation of what they are willing to bid.

Adjust has partnerships with multiple mediation platforms, including MAX by Applovin. These platforms provide access to a variety of networks that are selling ad space. Insights into the ad revenue and associated impressions are then provided back to Adjust and are available for analysis in the dashboard.

Learn more about how Adjust helps make ad revenue reporting seamless here.