Waterfall Model

The Waterfall Model is a sequential method of selling ad inventory in which publishers offer impressions to multiple demand partners one after another until the ad space is filled. Each demand source is ranked by priority, typically based on historical performance or average CPM.

If the first network declines an impression, it cascades down to the next until a buyer accepts it—hence the name “waterfall.” While once the industry standard, this model often resulted in revenue loss because higher-paying bids from lower-priority partners were missed.

Header bidding and unified auctions have largely replaced the waterfall approach by allowing all demand sources to compete simultaneously. Nonetheless, understanding the waterfall remains important for legacy systems and revenue analysis.

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