Delivery basics

Ad competition with dynamic allocation

Learn how non-guaranteed ads compete with guaranteed ads

Dynamic allocation allows all non-guaranteed demand—Open Auction, Open Bidding, and remnant line items—to compete in real time with guaranteed demand. Competition occurs on an impression-by-impression basis and does not compromise delivery or revenue of guaranteed demand.

How dynamic allocation works

If a guaranteed (Standard or Sponsorship) line item is eligible for an impression, in competition with Open Auction or remnant line items:

  • The guaranteed line item competes using a temporary CPM or "opportunity cost" that Ad Manager calculates automatically.
  • Open Auction or a remnant line item serves if they pay more than the opportunity cost of not serving the guaranteed line item.
  • The temporary CPM set by dynamic allocation maximizes your revenue from Open Auction and remnant line items without causing under-delivery of guaranteed line items.

If you only have remnant line items competing with an eligible Ad Exchange line item, Ad Exchange competes in real time with the highest CPM of the remnant line items that haven't reached their goal (absolute or by percentage).

Learn more about how we pick which ad to serve.

Products that work with dynamic allocation

The following Google products can serve ads to Ad Manager networks using dynamic allocation:

  • Ad Exchange (and Open Bidding, when enabled)1: Demand can come from a number of large third-party ad buyers, including Google Ads and other buyers participating in the real-time bidding exchange, which may include Preferred Deals and Private Auctions.
  • AdSense: Provides fewer controls and more straightforward management. Demand can come from a number of large third-party ad buyers, including Google Ads and other buyers participating in the real-time bidding exchange.

More about dynamic allocation

Dynamic allocation protects delivery of guaranteed line items by automatically adjusting the temporary CPM. Therefore, a guaranteed line item that is behind schedule wins often enough to stay on pace to satisfy its goal and pacing settings. If the temporary CPM is too high, Ad Manager doesn't call Ad Exchange, which explains why sometimes the number of "Impressions competing" is lower than the "Eligible impressions" in reports.

Since Ad Exchange ads compete with remnant line items on a CPM basis, the dynamic allocation process maximizes publisher yield regardless of demand source.

By allowing competition between guaranteed line items and remnant line items/Ad Exchange ads (when the latter have a sufficiently high bid), Ad Manager maximizes efficiency. This increases publisher yield and advertiser value compared to a static allocation (“waterfall”) system.

Remnant line items set to a cost per action (CPA) rate are treated like House line items: as if they have a $0 rate and, thus, do not compete on price via dynamic allocation.

Understand line items types and priority

The following line items are mentioned in this article, and it’s helpful to understand how they work.

  • Line items with delivery goals: Line items that have delivery goals, either an absolute impression/click goal or a percentage of delivery. These include Sponsorship, Standard, Network, Bulk, or House line item types.
  • Line items without delivery goals: Line items that compete on the basis of CPM but do not have delivery goals—that is, they have unlimited delivery goals. These include Price Priority, Ad Exchange, and AdSense line item types.
  • Guaranteed line items: Sponsorship and Standard line items, which fall in the priority range of 1 to 11.
  • Remnant line items: Price Priority, Network and Bulk line items, with a priority 12.
  • Ad Exchange line items: Also with a priority of 12.
  • House line items: House line items have a priority of 16.

Configurable priority

Some networks may have configurable priority values enabled. This feature allows users to change the numeric value of a line item type. For instance, the Ad Exchange line item type has the default priority value of 12, but with configurable priorities, users can change the value of an Ad Exchange line item to 4.

Use of this feature is recommended only for exceptional cases as it can have unintended impact on ad serving and revenue.

Guaranteed line items may be impacted if priority is changed

Guaranteed (Standard or Sponsorship) line items may be impacted by this rule if Ad Exchange line items are set to a priority value above them. If you change Ad Exchange priority to a higher value, this will prevent dynamic allocation from taking line item pacing into consideration and can cause delivery issues for guaranteed line items.

Consider the following:

  • Line items with a lower or equal priority than that of the Ad Exchange or Price Priority line item are considered remnant inventory and compete based on price, rather than a temporary CPM.
  • Price Priority line items with a custom priority can change the priority level where other line items are considered remnant or guaranteed.

Customized numeric priority values

Some networks can change numeric priority value of line item types. Guaranteed line items can only be set to priorities 1-11 and non-guaranteed only between 12-16.

Changing priority may be needed for very few and limited cases. However, use this feature with caution as changing the priority value can adversely affect ad selection and is therefore not generally recommended.

Learn more about the Ad Manager ad selection process and how Ad Manager counts impressions and clicks.

House line items and the auction

House* line items only serve when no remnant line items (Network, Bulk, Price Priority), Ad Exchange or Open Bidding demand are available to serve. That is, House line items are treated as if they have a $0 rate and do not compete on price through dynamic allocation.

House line item CPM determines ranking of eligible House ads but doesn't need to meet any floor price set in unified pricing rules in order to be eligible to serve an ad, thereby effectively serving as a fall-back ad. Learn more about unified pricing rules.**

* Note that Price Priority, Bulk and Network line items that do not compete on price in the unified auction (such as line items with a zero rate and no Value CPM) are treated as House line items.
** For video optimized pods, House line items compete based on percentage and do not use CPM when Ad Exchange is not involved.

1 Throughout this page, references to Ad Exchange mean Ad Exchange and Open Bidding when enabled.

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