The Basics of In-app Ads: Classic Waterfall Mediation and Programmatic Mediation
The most popular way to monetize an app is through in-app ads. To start showing ads in their app, mobile developers use ad mediation and connect their app to multiple ad networks via Software Developer Kit (SDK). Most ad mediation solutions employ a waterfall model in which ad networks compete for ad inventory and get ranked in accordance with how much they are willing to pay for placing an ad. Publishers offer inventory to ad networks that are ranked first in the waterfall, because they historically pay higher. Then an ad requests move further down in case the previous networks are not interested.
Programmatic mediation is based on unified real-time bidding (RTB) auctions where all demand sources, including ad networks and Demand-Side Platforms (DSPs), can bid on app inventory simultaneously. The highest bidder wins an ad impression. In the past publishers turned to programmatic ad demand in an attempt to sell the remnant inventory that was overlooked by ad networks in the waterfall. That created a bad rap—publishers thought that it was not possible to find premium inventory in programmatic auctions. This is not true today and programmatic buying is far more than just an option C. It is obvious that programmatic advertising is on the rise and will only continue to bring greater value.
Benefits of Programmatic Mediation
In the waterfall model publishers have to rely on historical revenue data. Over time this affects eCPMs—they become lower since ad networks don’t have to compete with each other after securing higher placement in the waterfall. On the contrary, with real-time auctions publishers can obtain precise price data and access higher eCPMs as a result of demand sources competing at the same time. Waterfalls often turn out to be more time-consuming and much less transparent in comparison with programmatic bidding auctions. Each bidder has a chance to win regardless of previous results. Plus an auction produces results in less than a second.
Who facilitates unified auctions? Ad exchanges facilitate unified auctions and provide a platform for mobile publishers and advertisers to sell and buy, with prices determined through bidding. Ad exchanges are connected to multiple Demand-Side Platforms (DSPs) and only require one SDK with which publishers can reach those DSPs and other demand sources participating in bidding auctions. Publishers can connect to ad exchange directly or through Supply-Side Platforms (SSPs). Ad exchanges give publishers an opportunity to offer all of their inventory to multiple demand sources all at once. All in all, ad exchanges have a wider global reach and possess the technology to conduct high-speed auctions. Thus they bring a revenue influx and can become a powerful additional monetization source.
One Step Further: In-app Header Bidding
Here it’s important to draw a distinction between RTB (Real-time bidding) and In-app header bidding.
Virtually, all ad exchanges operate via RTB protocols. However, not every ad exchange employs in-app header bidding technology. RTB simply describes the automated part of auctions where advertising opportunities are happening in real-time, whereas in-app header bidding is a technology that allows bidding in real-time with full transparency and on premium inventory.
With in-app header bidding multiple demand sources compete for ad inventory in the same unified auction—with all bids visible to the publisher. Another advantage is that in-app header bidding uses open-source infrastructure, similar to Prebid.js on the web, that makes processes even more transparent.
It has to be noted, not all ad exchanges operate in the same manner. Some rely only on second-price auction instead of first-price, some provide more integration options than others, some have a bigger variety of ad display formats, some are connected to a multitude of DSPs, but not all of those DSPs might be active. All of these factors matter if you only want to connect to one ad exchange and get the maximum value without putting too much pressure on your existing monetization setup.
Now let’s look deeper into the factors to consider when choosing ad exchange as an additional in-app monetization source.
Why choose BidMachine ad exchange?
BidMachine provides the programmatic platform for mobile publishers and advertisers to earn and partner directly. We use and develop in-app header bidding technology to ensure high quality ad monetization results and transparency.
For most app publishers it’s paramount to integrate a new solution as smoothly as possible — with no latency issues, no app crushing, and no significant loss of time.
First of all, there is absolutely no need to interrupt your current monetization setup. BidMachine is simple to integrate and it doesn’t take much time to get things going. Every publisher works with a dedicated account manager to speed the process and customize if needed. SDK integration guarantees better ad revenue results and and stable performance.
Secondly, with the amount of in-app SDKs publishers deal with, it’s important to keep things light. BidMachine’s SDK is lightweight and connects you with over 50 active DSPs. Not only can publishers increase competition for their inventory, but also easily attract premium ads into their apps. We know how little time monetization teams have for integrating heavy SDKs, so we prioritized giving publishers a seamless integration experience.
Benefits of integrating via the BidMachine SDK:
To facilitate the integration phase, BidMachine offers financial support. If you’re interested in applying for an integration bonus, click here to get a chance to receive up to $20,000 upfront. This offer will be especially interesting to publishers who want to maximize yield, spend less time on setting up programmatic monetization, and invest more resources into developing and improving their apps.
Performance: In-app Header Bidding and First-Price Auction
Unlike other ad exchanges BidMachine employs in-app header bidding technology from the very beginning. When all auction participants bid via in-app header bidding, both publishers and advertisers undoubtedly gain: publishers increase competition for their inventory and advertisers get access to transparent auctions and more efficient bidding.
BidMachine connects publishers to not only the most trustworthy DSPs, but also to ad networks that compete via in-app header bidding, which ultimately ensures better traffic quality. BidMachine partners with high-performing DSPs such as PubMatic and Liftoff that run effectively optimized campaigns and attract quality advertisers. To learn more about how our DSP partners run their campaigns, read our Q&A with Liftoff.
In addition to traditional second-price auction, BidMachine implemented first-price auction model to mitigate auction manipulations, often present in second-price auctions. Second-price auctions create opportunities for advertisers to place very high bids to win the auction, but to pay much less in the end. In the first-price auction setting the winning buyer pays exactly what they bid — no exceptions. It might take more time for advertisers to strategize, but in the end all auction participants benefit from increased transparency. Advertisers don’t need to worry about tactics to adapt to ever-changing rules or try to outsmart competitors who are coming up with shady moves. While publishers can rely on higher prices since second-price auctions traditionally offer lower bids, which negatively affects publishers’ revenue.
Increased Revenue and Cost Efficiency
Simply put, the biggest benefit BidMachine delivers is increased publisher revenue. Based on BidMachine internal data, it is possible to increase your revenue up to 30% thanks to in-app header bidding. Adding an ad exchange as a monetization source with low expectations is not a reality anymore. The right ad exchange can significantly boost your revenue and fill your inventory with high quality ads.
It is not a secret that some bigger established ad exchanges take out a chunk of publishers’ revenue. As a result, mediation fees fluctuate and become less predictable. Even though the access to demand is ampler, in the end publisher revenue is lower. BidMachine offers fixed, flat fee after individual discussion with every client of the volumes and other important details, including customization.
Moreover, BidMachine provides transparent financial reports and an opportunity to handle finances directly with demand partners. This helps to avoid additional middlemen fees and solidifies higher standards for financial transparency.
Engaging ad formats
Unique in-app environment inspired a variety of engaging ad formats that were previously not present on the web. BidMachine offers multiple ad formats to boost your monetization efforts. The latest eCPM trends for various ad formats are covered in the latest Mobile In-App Monetization Performance Index (2019). You can see eCPM performance for BidMachine and other demand sources as well as useful information on ad formats.
If you are integrated with our ad mediation solution, Appodeal, you can benefit from hybrid monetization model that combines waterfall and real-time auctions. That way your inventory is being visible to ad networks in the traditional waterfall and to demand sources (DSPs and ad exchanges) simultaneously. The highest bids from both auctions compete against each other and the one that offers the best price wins. This hybrid model is meant to help publishers maximize revenue and get a good understanding of prices they can expect for each inventory unit.
Are you worried about increasing ad fraud? We are, too. That’s why we implemented app-ads.txt that allows advertisers to see who is authorized to sell publisher inventory. This is one of many steps towards combating fraud. Our demand partners are happy to see that more and more publishers are adding app-ads.txt since it’s fairly easy to do, but has a tremendously positive effect.
Ready to try BidMachine? Talk to one of our specialists and learn about other perks and about how your particular business can benefit from BidMachine programmatic advertising.
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Main illustration – Alexander Kostenko.