What is Advertising Waterfall and how to build it?

Advertising waterfall has become a classic method of organising demand in the world of digital advertising. It was the advertising waterfall that for many years made it possible to maximise the profit of the publisher. But is it still so? Even while the Header Bidding is being actively implemented by most of the largest advertising platforms.

What is Ad Waterfall?

Advertising Waterfall – is the traditional programmatic optimisation method, used to maximise the revenue of the publisher generated from a set-up, that uses multiple demand partners. The waterfall organises ad sources in a way that is meant to yield the highest CPMs for advertisers and increase revenue for publishers. Although today the header bidding becomes more and more popular – Ad Waterfall can still be the best option in many situations.

In simple words it means that the publisher serves ads from different ad demand sources in a descending order of their historical CPMs. To understand better – let’s make a simple example.

Imagine that you owe a website about cars and you have 3 clients. The first one is Lamborghini, the second one is Mercedes and the third one is Renault.

• Lamborghini wants to show their ads only for male, on iPhone in New York and they are ready to pay 70$ per 1000 impressions.
• Mercedes wants as well to show ads only for male on iPhone but all over the world. And they pay 20$ CPM.
• Renault shows their ads to everyone but they pay only 2$ for 1000 impressions.

The best option for the publisher would be to check gender, device and geolocation and to show the most expensive ads first to maximise the revenue. But it’s an example with direct advertisers and how does ad waterfall work for ad platforms? First let’s talk about coverage.

Why we should consider coverage speaking about advertising waterfall?

When the publisher has several demand sources, in other words several ad-platforms – there always are those who give on average higher CPM. You’ll ask why not to use just the one with a higher CPM? And this is a very good question. But most likely the one with higher CPM will give you the lowest coverage rate. It means that if you pick the ad-unit of some local ad platform, which serves ads of VIP advertisers – they will give you a good price (CPM) but they will show their ads only to “most expensive” 30% of your readers. And what about the rest? the rest will not be covered.

Here appears a need to build the Ad Waterfall. In case the VIP ad-platform doesn’t cover the exact user due to device or location or other parameter – they should provide a pass-back and there should be a secondary ad-platform that will cover this user. Usually on the second place there is an ad-platform with on average lower CPM but a higher fill rate. An so on and on – up to 5-7 ad platforms in a row.

It is very similar to clothing store. They put the higher prices for the new collection (first step on waterfall with lower coverage rate) after a month they provide discounts (second step and higher coverage) and make a sale (third step and close to 100% coverage) at the very and of the season. Such a strategy allows them to rise an average price for the same dress while selling as many dresses as possible to all buyers with different incomes (prices). So as you can see it is not an invention of digital marketing but just an adaptation of old experience to a new reality.

If the closing store could sell all the dresses to passionate rich clients – would they make any discounts? – No! But do they make more money selling extra dresses with discounts? – Yes! This is the same as Advertising waterfall.

Different ad-platforms represent different clients groups in a closing store. And a successful store (in our case a website) will provide service to all groups of clients until all the dresses are sold out.

What are the advantages of Advertising Waterfall?

There are so many laudatory odes about header bidding and not in vain. But there is a big BUT! HB is a perfect in theory. If all the advertisers in the world would have bean participants of a unique ad platform there would be no any need in Ad Waterfalls. But it is not so. Quite often the HB platform doesn’t include the exact client who is willing to pay the best price exactly for your website. OR the HB platform doesn’t include the advertiser that wants to cover the exact user on your website. So What to do?

Th major advantage of ad waterfall is that you can still use it along with Header Bidding. Lets imagine You have a partner that serves direct ad campaigns through HB with Criteo, AdExchange and other big ad-platforms. It will give you a higher eCPM. PERFECT! But what if a direct advertiser gives you an offer with CPM higher than in HB?

In such a case you can serve direct ads first and then call for HB Script like PreBid.

This approach will give you advantages of both Header Bidding and Advertising waterfall at the same time. So there is no need to reject using Ad Waterfall approach if you learned how to use HB on your website.

Can Ad Waterfall bring more money than HB?

Yes. An even often. In majority of cases HB uses bids for the fix sized ads. And to make it really effective you should consider all possible ad sizes for each ad-unit. You can say that there is an option to serve multiple ad sized into one ad-unit. And you are right. But there appear so many devises with different screen sizes that your code will up-to-date not for a long time. And the setup itself may be very time consuming. So on practice it is very common that AdSense responsive ads on mobile very often bring the higher result than HB.

Taking into account that around 80% of page-views nowadays are provided through mobile devices – for many publishers (not the biggest ones) the better choice may be Just AdSense instead of Header Bidding technology. Especially taking into account the costs of correct implementation of HB.

So if the AdSense may bring more than HB – the Ad Waterfall, which includes AdSense as one of the steps may bring even more.

In other words:

• use HB on fixed size ad-units as a part of waterfall;
• use ad waterfall that includes AdSense on mobile flexible ad units;
• using both will most definitely bring you the best result

For those publishers who are not found of setting up programmatic ads there is an option to get help with this issue:

How to build advertising waterfall? Example.

Now we will go through an example which will fit the majority of websites in the world. For sure for every web-site there is a unique way ti maximise income considering geo, topics, devices etc. But for sure this ad waterfall will bring for every web-site more money than just AdSense or AdX…

Ad Waterfall for mobile flexible ad-unit

For the first place put an AdSense responsive ad unit. Be aware of CLS. To solve an issue with Web Vitals – you should put the script into a “div” with fix or min-hight. But we all know that AdSense itself doesn’t provide 100% coverage. So you would use the service of Global Native Ads Platform. Generate a responsive code. Place it into an .html file and call it when AdSense doesn’t cover the exact ad impression. In this case you will get both: the benefit of flexible ad units higher CTR and CPM (even then HB) and 100% cover rate of Native ads.

This simple Ad Waterfall can compete the majority of HB setups on mobile.

Ad Waterfall for Desktop Fix size ad-unit

For the first place put a fix size AdManager ad-unit (AdExchange demand). Don’t forget to include smaller but suitable ad sizes. For ex. [160×600] is a good option for [300×600] ad unit. Then create a price priority campaign in your AdManager and serve through it Global Native Ads Platform ad units with the same sizes. Adjust the price in your campaign in AdManager to the real price you get in MGID dashboard. It will be much better strategy than using a bid flor. Why?:

• You will use the advantages of Bid Flor – making advertisers bid higher and rising the eCPM of AdExchange demand;
• You will not loose the rest of ad impressions for nothing but will sell them for a reasonable price.

This simple Ad Waterfall can compete the majority of HB setups desktops.

Don’t have AdSense or AdExchange or Native Ads access? Go here.

FAQ about Ad Waterfall

Can I use RTB, Header Bidding and Ad Waterfall at the same time?

Yes you can. Even more – you should, if you want to get the highest possible RPM and revenue.

What is the difference between Ad Waterfall, RTB and Header Bidding?

• RTB – bidы from different advertisers inside one platform
• HB – bids from different Ad-Platforms inside HB Script
• Ad Waterfall – subsequence of ad-platforms based on historical CPM

What is better Ad Waterfall or Header Bidding?

Header Bidding may be a part of Ad Waterfall but Ad Waterfall can’t be a part of HB. So Ad Waterfall is “Bigger” than HB. In other words – more comprehensive.

What is better Header Bidding or RTB?

It depends. In some cases RTB in Other Header Bidding. There is no best solution for 100% cases.

How long does it take to build an Ad Waterfall?

To build an ad waterfall which consists of two steps is as difficult as to create two separate ad units.

Can I get the higher coverage rate with Ad Waterfall?

Yes – on average it will be higher than both with RTB or HB.