Waterfall In-App Auctions

Learn more about the benefits of mobile ads waterfall management and how the Bidlogic technology can enhance it

What is an Advertising Waterfall?

In the realm of mobile advertising, waterfall mediation refers to a traditional method of ad buying in which ad sources are ordered hierarchically. This structure aims to achieve two primary objectives: securing the requested Cost Per Mille (CPM) for advertisers and ensuring ad coverage for publishers. However, to draw the best effects from waterfall auctions and maximize eCPM for app publishers, each ad network must be strategically placed in the waterfall, and the floor price must be set at the right level (neither too high nor too low, as both these might result in inefficiency).

Why Use the Waterfall Model?

Although in-app bidding is now a leading method of managing app inventory, waterfalls still, in most cases, account for up to 30% of app ad revenue. Ad waterfall management might sound complex, but its principle is reassuringly simple and is a proven method of making things easier. By setting eCPM floors at an optimal point with the help of monetization partners, publishers can focus entirely on app development. This method allows them to ensure their ad inventory is filled effectively without getting bogged down in the complexities of ad operations.

How Does an Advertising Waterfall in Mobile Work?

The functioning of an advertising waterfall can be broken down into a sequence of steps. Here is a detailed breakdown of the process:

  1. App ad request – when a user opens an app, the app sends a request to its ad server to show an ad. This initiates the ad-serving process;
  2. Waterfall setup – the ad server has a preset list of ad networks arranged based on their eCPMs. This arrangement is known as the waterfall. The networks are ordered from highest to lowest eCPM, with the aim of maximizing revenue;
  3. Primary network query – the ad server initially checks with the top-ranked ad network in the waterfall, which has the highest eCPM. This network is given the first opportunity to serve an ad;
  4. Response from ad network – the top ad network reviews the request. If it has a suitable ad available that meets targeting and budget criteria, it provides an ad, concluding the process. The ad is then displayed to the user;
  5. No ad response – if the top ad network does not have an ad to serve (which would meet the specified criteria), the request moves down the waterfall. The ad server proceeds through the ad networks in descending order of eCPM until an ad is delivered.

The person managing the waterfall on the publisher’s side has to consider which eCPM placements to adjust, remove, or relocate within ad networks in waterfall arrangements in order to achieve satisfactory revenue. The task gets even harder, considering the fact that each app may feature multiple waterfalls due to segmentation by countries, regions, and ad formats. Thankfully, tools like Bidlogic can help with this task by automating the whole process. Bidlogic manages the order of the eCPM instances in the waterfalls with the help of A/B testing, optimizing the setup for maximum revenue.

Advantages of Using Waterfall Ad

The waterfall model has several advantages that make it a preferred method for many publishers:

  1. Efficient ad fill rate – by leveraging multiple network partners, waterfalls help fill ad space efficiently. If the top network cannot fill the request, the process moves to the next one, ensuring that the ad space is covered;
  2. Simplified integration – when opting for waterfall solutions from a verified partner, developers only need to integrate the mediation platform’s SDK, reducing the complexity of managing multiple ad networks. This streamlines the process and makes it easier to handle ad operations;
  3. Automated management – a good monetization partner can help automate the prioritization and sale of ad inventory. The right collaboration can free developers from manual management, allowing them to focus on improving their app rather than managing ads.

Disadvantages of Waterfall

While waterfall advertising has been a dominant method for many years, it is not without some drawbacks, which include:

  1. Estimated eCPMs – waterfalls rely on estimated CPMs, which may not always reflect the true value of the inventory. If the estimates are inaccurate, this can lead to suboptimal revenue;
  2. Fixed order – the fixed list order prevents lower-ranking networks from bidding higher to obtain inventory, potentially leading to mediocre earnings. Networks placed lower in the waterfall might have been willing to pay more than those higher up, but they rarely get the chance to do so;
  3. Time and need of expertise – in order to effectively manage a waterfall, time and practice are paramount;
  4. Historical price skew – historical performance data may not accurately represent a network’s current willingness to pay, causing inefficiencies in the waterfall. Networks that performed well in the past may not perform as well now, but the waterfall setup may not reflect this change quickly.

Despite these limitations, the waterfall method remains a valuable tool in the mobile advertising landscape. It provides a structured and manageable way to serve ads, even if it may not be considered the most efficient method available today.

Hybrid Solution

A hybrid monetization solution is a strategy used in digital advertising to maximize revenue from ad requests by combining two different approaches: waterfall and in-app bidding. This hybrid approach leverages the strengths of both methods. In-app bidding allows multiple networks to bid in real-time, potentially increasing competition and revenue, while the waterfall ensures that there is always a structured fallback if in-app bidding does not fill the ad request. Bidlogic stands out as the first optimization tool to fully automate all aspects of managing advertising waterfalls and bidding auctions. It handles eCPM ad units, minimum bid floors, mediation groups, and waterfall A/B tests automation. By automating these processes, Bidlogic can help app publishers optimize their ad revenue without the need for constant manual adjustments. This makes it easier for developers to manage their ad inventory and focus on what they do best – creating great apps!

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