Waterfall to Real-Time Bidding: The Future of Game Monetization

The gaming industry is currently experiencing a shift towards more mature in-game monetization strategies, with new ad formats being developed for mobile devices. 

Programmatic advertising has revolutionized how ads are bought and sold. Mediation methods, such as waterfalls and open real-time bidding (RTB), are used to optimize ad placements, which may increase both revenue and eCPM rates. 

In this article, we explore waterfalls and open real-time bidding (RTB) and touch on Google’s demand components.

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Waterfalls vs. Open Real-Time Bidding: A Simplified Analysis

In the realm of in-game advertising, the transition from Waterfall to Open Real-Time Bidding (RTB) models is a topic of interest. 

Here's a simplified breakdown of both methods:

Waterfall Model

1. Process: Ad networks are ranked based on historical revenue per thousand impressions (eCPM). The publisher checks each ad network, from highest to lowest eCPM, until a suitable ad is found.
2. Example: Assume a game publisher has three ad networks to choose from:

• AfricaAds: $2.50 eCPM
• BlueAds: $2.80 eCPM
• CloudAds: $3.20 eCPM With a floor price of $2.60 eCPM, the publisher will skip AfricaAds and select BlueAds since it meets the floor price.

1. Advantage: Provides control over ad partners and ensures ad slots are filled.
2. Disadvantage: May result in lower revenue as it doesn't assess every option and relies on historical eCPM, which may not reflect current market rates.

Open Real-Time Bidding (RTB)

1. Process: All ad networks bid simultaneously for ad space. The highest bid gets the slot, ensuring real-time market value.
2. Example: Using the same three ad networks and floor price, RTB will secure the highest bid from CloudAds at $3.20 eCPM instantly.
3. Advantage: Potential for higher revenue due to real-time competition and market-driven pricing. Offers a broader range of ad formats and creative options.
4. Disadvantage: Platforms like Max and Unity Level Play have fewer approved bidders in RTB, which might affect revenue diversification. Solely prioritizing the highest bid overlooks other factors like ad quality or user retention.

Comparative Outcome:

In this example, the Waterfall model would secure an eCPM of $2.80, while RTB would achieve an eCPM of $3.20. The RTB model, by evaluating all bids simultaneously, fetches a higher eCPM and possibly more revenue.

However, the waterfall model allows for a more controlled selection of ad networks based on other criteria alongside price, like ad quality, which can be critical for user retention.

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Ad Mediation: RTB, Waterfall, and Hybrid Explained

Explore the fundamentals of ad mediation with iion. This guide breaks down Real-Time Bidding, Waterfall Management, and Hybrid Strategies, providing insights into their implementation across platforms like Unity and MAX.

Real-Time Bidding (RTB): This is a feature in Unity's mediation platform that enables top networks to bid in real-time for ad impressions.

Waterfall Management: This strategy allows multiple ad networks to compete for impressions, optimizing ad fill rates and revenue for publishers.

Hybrid Strategy: A mix of RTB and Waterfall, this approach maximizes revenue by allowing one response from all bidding participants, which is then inserted among manual mediation line items. Note: A network can participate in either waterfalls or bidding, but not both simultaneously.

Platform Variations: Mediation strategies may differ based on the preferred gaming inventory of the platform.

Ad Unit Placement: Implementing these strategies is streamlined on Admob, MAX, and Ironsource integration.

In-Game Placements: For in-game ads, ad units are not managed via mediation and require a standalone SDK to be integrated. 

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Google's Demand Components

There are two layers that drive monetization for publishers on Google: Bidding and Waterfall. 

Google offers several platforms to help publishers access different sources of demand, such as Google Ads, Google DV360, Google AdX Third-Party Bidders, Direct campaigns, and PGs/PMPs. 

The Bidding Layer collects demand from Google AdX, DV360, and Google Ads. 

The Waterfall Layer, on the other hand, combines demand from Google AdX, DV360, and Google Ads through AdMob. Additionally, Google Ads Manager (GAM) includes Direct Demand capabilities, Programmatic Guarantees (PGs), and PMPs.

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Google Ad’s Upcoming Changes

Google Ads, not Google as a whole, is transitioning to Real-Time Bidding (RTB) for apps by 2024. 

The impact on various demand components:

• Google Ads will undergo the most significant change requiring publishers to adapt to RTB for demand access by encouraging the inclusion of a bidding ad unit from Google.

• DV360 and Google AdX 3rd Party Bidders remain unaffected, being available on both Bidding and Waterfalls.

• Direct Demand and PMPs/PGs will only be available through Google Ad Manager setups.

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Staying Ahead: Building Bridges Towards New Revenue Streams

Leverage under-monetized regions and consider solutions like iion’s fusiion for new revenue streams to mitigate the impact of the changing bidding landscape. 

The transition to RTB is more than just a technical shift—it's an opportunity to explore new horizons in advertising revenue.

Read more about Google Ads move to real-time bidding auctions in 2024, here: Google Monetization Platforms: Bidding Changes Unpacked

Conclusion

The recent overhaul in Google's ad bidding system is a game-changer for the industry. To thrive, publishers need a two-pronged strategy:

1. Diversify Revenue: Instead of just adapting to Real-Time Bidding, focus on long-term revenue. Build a strong monetization stack by diversifying your revenue streams. Tools like iion's fusiion can make a big difference.
2. Innovate:The shift to RTB isn't just a tech update; it's an opportunity to redefine your monetization strategy. Aim for a model that enhances both user experience and revenue.

The RTB evolution is not just a hurdle but an opportunity for innovation and growth in the gaming ad space.

Luckily, you don’t have to navigate this complex world alone. Join iion to unlock your game's revenue potential. 🎮=👑 

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FAQs

What is open Real Time Bidding (RTB)?  

Open RTB (Real-Time Bidding) is a programmatic advertising protocol that allows publishers to receive and consider bids from multiple ad networks in real-time auctions. This enables real-time ad optimization and a wider range of ad formats for better user engagement. 

What are waterfalls?

Waterfalls are a programmatic ad mediation strategy where ad networks are ranked based on historical performance. Publishers sequentially review and select from the list until a suitable ad network is found to fill the ad slot. 

What is OpenRTB used for?

Open RTB (Real-Time Bidding) is used for programmatic advertising, enabling publishers to receive and evaluate real-time bids from multiple ad networks. This leads to optimized ad placements and better revenue opportunities.

What is AdTech programmatic?

AdTech programmatic refers to the use of technology and automated processes in the advertising industry to buy, sell, and optimize digital ad placements in real time. Programmatic advertising uses algorithms to target specific audiences, enhancing ad efficiency while streamlining the ad-buying process. 

What is a real-time bidding system?

A real-time bidding system is a programmatic advertising process where advertisers bid in real-time auctions to compete for ad impressions. In the end, the highest bidder is instantly served to the user, allowing for targeted ad placements. 

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