Welcome to the section about waterfalls. Now, as we discussed, there are many different demand partners out here that work in the programmatic world that have relationships with advertisers that can fill your unsold inventory. So if you're a website, and you don't have a direct sales team, or you haven't sold 100% of your available ad inventory through a sales team, you want to work with a programmatic partner, so that they have the opportunity to fill that ad and pay you money. You probably want to work with multiple too, because each demand partner works a slightly different way. They can maybe give you different rates, and they have different relationships with different advertisers. So you want as much possible demand filling your ad space as possible because you're going to make the most money that way.

So I'm going to walk through a situation what this might look like if you had a website and you were calling your demand sources through the traditional waterfall as a traditional waterfall because that is how most The management's are set up. And even with the shift head of it, this is still important to understand as it will probably still be there for the foreseeable future. So, in this situation, we have five demand sources moto and mobi, open x interactive, double click. Some of these are mobile specific for the case of this example, we're just gonna assume that can run on anything. But some partners like somato are mobile specific, some like open x and double clicking on anything, but not to have complicated things. For this example, we're going to say they can run on anything.

So here we have our website. And we have two units, a leaderboard in a box. And as we know, from one on one, this is a 720 by 90 and a 300 by 250. A standard ID adds us. So essentially, the process is this, the website loads, the ad loads and a call is made to that publishers ad server. Now in this situation, we're going to say they use DFP.

Double click for publishers. That is Google's answer. And we're saying that they're using Google because Google is the largest. And a lot of publishers do use them. So what would happen is that the publisher would have a bunch of relationships set up these man partners, and they put them in order. And the order is important.

Usually, the first one at the top, is what he's going to fill the most, or the one is going to fill the highest rate. And it goes so on and so down below. So what happens is the ad server goes to their stack and says, okay, we've gotten that unit, can you serve an app? And they say yes or no, they might say yes, and so an ad is served. And none of these other guys even see that impression. They don't even know it exists.

They don't see the request come to our system because somebody ahead of them search nap. What often happens I was at the dump for a few people, if any Phil at 100%. So what happens is they say no, I don't have anything, go to the next guy. And they go to a movie and they say, Can you feel my thing? And they say yes or no if they say no, goes down from next guy until somebody can fill an app. So it goes down and down and down, like a waterfall.

Now, a couple really important things to note here. When you're in first position, you are expected to fill up the highest rate. So you might have what's called a CPM floor. And they say somato, you could fill but you can only fill it was at $1 more. So mother might say in this situation, you know, I could fill but not the dollar. So you got to go on to the next guy.

Not the next in line. They don't have as stringent rules. They might say, okay, you have a floor. Your floor is 90 cents, as opposed We're all in a movie might say, No. So don't have anything to fill, go to the next guy. Then we get openings and their floors 80 cents.

And they say, Yep, I got somebody that can fill at 80 cents. So they are the winner. They serve an ad through the ad server, and it goes back and displays on the site. This entire transaction happens again with the next half of the range about 250. And it could be somebody totally different. In this case, maybe some model can fill out $1.

So some model says, yep, I got somebody, they'll pay $1 for that. Thank you very much. Here we go. We'll serve you an ad. So as you can see, this is great for the publisher, because they have a little bit of control. They have multiple demand sources and they can put some guidelines in there to say, you know, we want to try to get as much as we can, but if we can't get it, you know, we have options to fill lower.

We'd rather To get something rather than nothing. Now, as you can see, though, there are two things here one, we have double click Ad Exchange. As you might remember, double click is our ad server. Again, double click is a Google company. So if you're using DFP, Google has what is called last look on every single one of their waterfall setups, which means if nobody could fill, and we get all the way to the bottom, double click, add x will fill, but they have no floor. As we discussed before, we have flows along the way.

$1 And 90 cents 80, so on and so forth. When you get down here, they don't really have a floor. The point is, nobody else could feel Give me what you've got. Now Google can get away with doing this because two reasons. One, you're using the technology. And two there is so huge that they will almost always have some kind of ad that can serve, but where's your first guy?

They paid you $1 down here, they may pay you five cents. So better than nothing sure, but barely. So on top of that, you got companies like open x here and open extra saying might go to the publisher and say, you know, we're filling at 80 cents. But we really could do better than that. If you put us higher in your stack, we have a lot of demand, it fills at $1. So if the publisher felt that was the case, they could go on and switch things around.

And they say, okay, open x, we're going to put you in the top somato. We're going to be down here. And we'll see how you did. Now open x gets chance to feel more and if they perform better in this position than somato did, the publisher will keep them there. Publishers generally do this on a pretty regular basis. They'll switch things around demands change or seasonality technology changes a whole bunch of different reasons why one might perform better than the other and why they may want to switch over time.

Also could come down to different contracts, maybe you have a higher rev share. So maybe in mobians moto are filling are performing very, very close. But in this situation smartos giving them a slightly better domain, they're paying them a little bit more on every ad request and in mobi, so the publisher might say, Okay, well keep up next to the top, but get a better deal with some mono. So we're going to put in here that kind of job jockeying goes on all the time. So that is your basic definition of a waterfall. We're going to get into header bidding.

So to set that up, open x is really in the key company Hear when it comes to start with header bidding. But as we discussed if open x is not in the first position, if they're down here, maybe the fourth position, as we discussed, they might not, they won't see 100% of all the ads. So what they're saying is, you know, if we're down here, and we're not even getting the opportunity to bid on a lot of guys, we could be winning auctions that we don't even have a chance to win. Or maybe they are when at an ad, or a 70 cent floor, but they're saying, you know what, if we have first look, we could fill up $1 or more. So open said, we really need to find a way to get to that inventory before anybody else and more efficiently than this traditional waterfall allows for and that's where header bidding gets into the mix.