Waterfalling

Waterfalling is a method of selling advertising inventory in digital advertising that uses a sequential process for bidding and selling ad space. In this method, ad requests are sent by publishers to multiple ad networks or Demand-Side Platforms (DSPs) in a specific order, starting with the highest-paying network.

Example:

A publisher puts their ad inventory up for sale.

• The first ad network (Network A) is given the opportunity to purchase this inventory at a set price.
• If Network A declines or does not purchase the inventory, the offer moves to the second network (Network B).
• The process continues until the inventory is sold or all networks in the chain have declined the purchase.

Advantages and Disadvantages:

Advantages:

• Simplicity: Easy to implement.
• Revenue Maximization: Potential to maximize revenue by selling inventory at the highest possible price.

Disadvantages:

• Time-Consuming: Each request is sent sequentially, which can be time-consuming.
• Potential Revenue Loss: May lead to missed revenue opportunities if not all networks have access to the inventory simultaneously.

Usage Example

Suppose a publisher has an ad banner for sale. They first offer it to Network A at $5 CPM (cost per thousand impressions). If Network A is not interested, the offer moves to Network B, which is willing to pay $4 CPM, and so on until a buyer is found or the inventory is sold at the minimum acceptable price.

Waterfalling was popular in the early stages of programmatic advertising but is now often replaced by more efficient methods, such as Header Bidding, which allows all networks to submit bids for the inventory simultaneously, increasing competition and potential revenue for publishers.