If the ad server determines that an Ad Exchange line item is eligible to compete for an impression, Ad Manager goes through the following steps to determine whether the Ad Exchange or the Ad Manager-booked line item should serve an ad.
- An ad request is sent to Ad Manager.
- Ad Manager finds the best guaranteed line item eligible to serve for the ad request and calculates a temporary CPM based on the line item's current delivery. Programmatic Guaranteed (PG) deals that didn’t get a bid are ruled out.
- Ad Manager calls Ad Exchange to find bids which can beat the temporary CPM of the best guaranteed line item.
- Ad Manager finds an eligible remnant line item with the highest CPM.
Bids in both private and open auctions compete on CPM. The highest bid competes against the winning guaranteed line item's temporary CPM.
- Ad Manager selects the line item or bid with highest CPM/temporary CPM.
In this article, the examples will use Line Item A to represent the best guaranteed line item. Line Item B represents the highest value remnant line item.
Ad Manager finds the best guaranteed line item eligible to serve for the ad request and calculates a temporary CPM based on the line item's current delivery.
Selection of the best guaranteed line item is based on many factors, including line item priority and how close each line item is to being on schedule. Learn more in the Ad selection white paper.
Ad Manager creates a temporary CPM for Line Item A. This value can be thought of as an opportunity cost based on the line item's progress and historical bid data for non-guaranteed demand, to optimize publisher revenue. In general, the lower a line item’s Satisfaction Index (SI) (that is, the more behind schedule it is), the higher the temporary CPM that’s passed to Ad Exchange.
Dynamic allocation uses this temporary CPM value to allow Line Item A to compete against eligible Ad Exchange and remnant line items in Step 5.
Ad Manager will always select the line item or bid with highest CPM or temporary CPM.
Lower-priority remnant line items and Ad Exchange line items do not compete when either of the following are eligible to serve:
- A Sponsorship line item with a goal of 100%
- A combination of Sponsorship line items at the same priority with goals that add up to greater than or equal to 100%
Ad Manager may also prevent lower priority remnant and Ad Exchange line items from competing if a guaranteed line item is at risk of not delivering in full.
If Line Item A is at risk of not delivering in full because it is far behind schedule, Ad Manager will prevent lower priority remnant and Ad Exchange line items from competing.
What happens when non-guaranteed items are eligible to compete
Ad Manager looks at remnant and non-guaranteed and Ad Exchange line items eligible to serve to the same impression:
- If there is no remnant or Ad Exchange line item eligible, Ad Manager serves the best guaranteed line item and serving is complete.
- If there are several contending remnant and Ad Exchange line items, Ad Manager ranks all eligible remnant line items by their value CPM. Ad Manager chooses the highest value remnant line item.
If there is no value CPM, Ad Manager uses the line item CPM instead.
- Among eligible Ad Exchange line items, the highest priority (lowest priority number) line item is selected. If two or more Ad Exchange line items have the same highest priority, then one is chosen by Ad Manager to compete.
Ad Manager calls Ad Exchange to determine if the selected Ad Exchange line item can provide a bid with a higher price than the temporary CPM of Line Item A.
A call to Ad Exchange means that Ad Exchange line items can compete with other line items in Ad Manager. This doesn't necessarily mean that an Ad Exchange ad gets served.
If Ad Manager calls Ad Exchange in Step 4, eligible Ad Exchange ads and Line Item B compete with Line Item A on a CPM basis in Step 5. The reserve price for Ad Exchange ads is at least the temporary CPM from guaranteed Line Item A.
The reserve price may be higher than this maximum due to other publisher configurations, such as unified pricing rules.
- If either an Ad Exchange ad or the highest value remnant ad (Line Item B) can beat the reserve price, then either the Ad Exchange ad or Line Item B serves, depending on which has the higher CPM.
Any Ad Exchange ad selected to serve still adheres to the conditions of Preferred Deals or Private Auctions, if applicable.
- If no eligible Ad Exchange ads or Line Item B can beat the reserve price, Ad Manager fills the impression with Line Item A based on its temporary CPM.
When we refer to the CPM of an Ad Exchange ad, that CPM is on a net basis to the publisher (that is, it takes into account Ad Exchange's revenue share).
When a visitor opens your site, an Ad Exchange line item is eligible to serve the impression, as are other guaranteed line items. With dynamic allocation, Ad Manager looks at all of the eligible guaranteed line items and calculates a temporary CPM for the winner. The winning guaranteed line item is late on delivery.
The temporary CPM is calculated as $6.50.
There are 2 other remnant line items with CPMs of $3 and $5, respectively. Ad Manager sends the temporary CPM ($6.50) to Ad Exchange. If no eligible Ad Exchange ad can beat $6.50, the guaranteed line item fills the impression.