The Programmatic Glossary
A practical glossary designed to help marketers, advertisers and ad-tech professionals understand the terminology that powers programmatic advertising
Programmatic
Waterfall Auction
A legacy method of selling publisher ad inventory where demand partners are approached one at a time, in a pre-set priority order, like water falling down steps. If the first partner does not buy, you try the second, then the third. Header bidding largely replaced this approach because it is much less efficient.
HOW IT WORKS
The publisher ranks their demand partners by expected yield. When an impression is available, the ad server offers it to partner one at that partner's historical CPM (Cost Per Mille). If they do not fill it (no bid or bid below floor), the impression falls to partner two at a lower expected rate, and so on until filled or lost.
EXAMPLE
A publisher has a waterfall: Google first, then SSP (Supply-Side Platform) A, then SSP B. Google passes. SSP A passes. SSP B wins at $0.80 But SSP B might have been willing to pay $2 for this impression. They just were not offered it at the right moment. Header bidding would have run all three simultaneously, likely generating significantly more revenue.
RELATED TERMS
Header bidding | Prebid | Open Auction | SSP (Supply-Side Platform) | Yield Optimisation
