The dark art of yield optimisation has produced a wide array of techniques for publishers eager to get the most money out of their inventory.
One of the most dependable techniques is “waterfalling”. Am approach that allows publishers to move their inventory of content from one market to the next to optimise for revenue or a set conversion. It’s a tactic that is difficult to implement at times, despite the promises of efficiency that usually is attached to automated selling.
Despite its implementation challenges, waterfalling is still a go-to strategy for publishers.
So, what exactly is waterfalling?
Waterfalling is a technique publishers use to maximise both the pricing and sell-through rate of their content. It’s also often called “daisy-chaining.”
How does it work?
Publishers started doing it in an effort to maximise distribution for the unsold/underperforming content they put on ad networks, which varied in both their specialties and pay rate. Publishers, trying to squeeze as much revenue out of each impression, worked with the ad networks that offered the highest rates first/had the most conversions, before working with those that offered lower rates until they monetised every impression. Hence the term, “waterfalling.”
Many publishers have moved on from ad networks to supply-side platforms (SSPs), right?
Yes, but waterfalling is still very much alive. Instead of daisy-chaining ad exchanges, publishers are daisy-chaining SSPs. Publishers start by selling impressions with one SSP (e.g. Google’s AdX) at a high price floor. If the impressions don’t get picked up, publishers push them to a second (e.g. Magnite, previously Rubicon Project and Telaria) or sometimes a third SSPs (PubMatic) at lower price floors until they do.
Sounds complicated. I thought SSPs were meant to simplify things?
It’s complicated. Optimising for multiple SSPs often involves a lot of testing, particularly since there are multiple buyers on multiple platforms potentially competing for the same inventory. Complicating it further is the reality that behind every SSP is an ad tech company that is trying to increase its own marketshare. So SSPs are not incentivised to play nicely with one another.
So why not just stick with one SSP?
The simple answer is, if publishers can find a way to maximise revenue, they’re going to experiment with it. There is a catch though. Poor implementation of waterfalling can cost publishers money. Having multiple SSPs offering the same inventory duplicates demand. With buyers bidding on the same inventory via different SSPs, they’re essentially bidding against themselves thus, increasing costs.
So what do publishers want?
In an ideal world, SSPs would be integrated with each other and allow buyers to bid on one collective inventory. If everyone has visibility over the same inventory, then publishers are getting a better value and SSPs will be able to facilitate sales at higher rates.
Originally published at https://www.jerviskoo.com on November 9, 2020.
