DFP and dynamic allocation

Dynamic allocation, preferred deals, and enhanced dynamic allocation

This article describes how DFP line items with guaranteed goals compete with Ad Exchange line items. It covers network settings for prioritized preferred deals, configurable priority, and enhanced dynamic allocation. Although this article specifically covers Ad Exchange line items, note that AdSense line items behave in the same manner but are not eligible for prioritized preferred deals.

It’s helpful to think of an Ad Exchange line item as a mechanism or conduit for connecting Ad Exchange with DFP, which can compare its line items to ads in Ad Exchange that might offer a higher CPM for a given impression. If you edit the priority of preferred deals to compete with DFP reserved inventory, or if enhanced dynamic allocation is enabled for your network, then Ad Exchange can also compete with DFP line items with guaranteed goals.

About dynamic allocation

Dynamic allocation is a yield-maximizing capability of DoubleClick for Publishers that allows Ad Exchange to compete in real time with line items booked in DFP. This competition can be on an impression-by-impression basis. Publishers configure settings in DFP and Ad Exchange in order to control which inventory is eligible to compete, and how.

Google products that work with dynamic allocation

The following Google products can currently serve ads to DFP networks via dynamic allocation:

  • Ad Exchange: provides inventory controls like preferred deals and private auctions. Demand can come from a number of large third-party ad buyers, including AdWords and other buyers participating in the real-time bidding exchange.

  • AdSense: provides fewer controls and more straightforward management. Demand can come from a number of large third-party ad buyers, including AdWords and other buyers participating in the real-time bidding exchange.

  • AdMob: (only enabled if you are serving AdMob campaigns) provides demand specifically for mobile apps. AdMob line items are not eligible for enhanced dynamic allocation. Demand can come from a number of large third-party ad buyers, including AdWords.

Types of line items mentioned in this article
  • Line items with delivery goals: Line items that have delivery goals, either absolute or percentage: sponsorship, standard, network, bulk, house.

  • Line items without delivery goals: Line items that compete on CPM but do not have delivery goals (i.e., unlimited delivery goals): price priority, Ad Exchange, AdSense. These are also referred to as dynamic allocation line items. This article is only concerned with Ad Exchange line items.

    DFP was built to mitigate the risk of under delivery. Therefore, line items with delivery goals are favored over those with no goals, such as Ad Exchange ads.

     

  • Non-remnant: Line items with a priority 1-11.

  • Remnant: Line items with priority 12-16.

Determining whether DFP or Ad Exchange serves an ad

If the ad server determines that an Ad Exchange line item is eligible for an impression (based on targeting and priority), DFP goes through the steps below to determine whether it or the DFP-booked line item serves.

First DFP selects the best line item that can serve to the impression. Then it compares that line item to Ad Exchange line items that are eligible to serve to the same impression, if any. If an Ad Exchange line item is of a higher priority (or equal priority for remnant line items), Ad Exchange is called. If Ad Exchange is not called, the DFP line item serves.

Once Ad Exchange is called, DFP looks at the eligible Ad Exchange ad with the highest CPM. If this ad has a CPM that’s equal to or greater than the DFP line item, Ad Exchange serves the ad; if not, the DFP line item serves. Remember that enhanced dynamic allocation calculates a temporary CPM value for line items, rather than using the user-entered value from DFP.

When we refer to the CPM of an Ad Exchange ad, that CPM is on a net basis to the publisher (i.e., it takes into account Ad Exchange's revenue share).

 

The following steps provide more detail about the ad selection process:

Step 1: Choosing the best DFP line item that can serve to the impression

In the first step of dynamic allocation, DFP chooses the best line item that can serve to the impression. This selection is made without reference to whether or not the line item will end up competing with an Ad Exchange line item. For example, based on DFP ad serving logic, a standard line item of priority 8 might be the best DFP line item that can deliver to the impression.

For brevity, let’s call the best line item DFP can deliver to an impression, Line Item A. Line Item A will compete against eligible Ad Exchange line items in Step 2, below.

Step 2: Determining if Ad Exchange is called
Calling Ad Exchange only means that Ad Exchange is given a chance to compete with DFP; calling Ad Exchange is not the same as serving an Ad Exchange ad (see Step 3 for that).
Scenario 1: With the default Ad Exchange configuration

By default, Ad Exchange line items are set to priority 12 and compete with other line items at priority 12-16.

  • If Line Item A is at priority 1-11, Ad Exchange is not called and Line Item A serves.

  • If Line Item A is at priority 12-16, Ad Exchange is called.

Examples

  • Standard 10 vs. default Ad Exchange: Ad Exchange is not called.

  • Standard 12 vs. default Ad Exchange: Ad Exchange is called.

Scenario 2: With configurable priority

With configurable priority, Ad Exchange line items can be set to any priority.

  • If the Ad Exchange line item priority is between 1-11,

    • Ad Exchange is called if Line Item A is the same priority as the Ad Exchange line item and has no delivery goals (i.e., is a price priority line item).

    • Ad Exchange is called if Line Item A is of a lower (higher numerical) priority than the Ad Exchange line item, whether or not it has delivery goals.

     

  • If the Ad Exchange line item is at priority 12-16, Ad Exchange is called if Line Item A is of equal or lower (equal or higher numerical) priority than the Ad Exchange line item.

Examples

  • Standard 8 vs. Ad Exchange 7: Ad Exchange is called.

  • Standard 8 vs. Ad Exchange 9: Ad Exchange is not called.

  • Standard 10 vs. Ad Exchange 10: Ad Exchange is not called.

  • Price priority 10 vs. Ad Exchange 10: Ad Exchange is called.

  • Standard 12 vs. Ad Exchange 12: Ad Exchange is called.

  • Standard 12 vs. Ad Exchange 13: Ad Exchange is not called.

  • Standard 12 vs. Ad Exchange 11: Ad Exchange is called.

Scenario 3: With preferred deals

An Ad Exchange preferred deal line item has a default priority of 6 for direct deals and 12 for the open auction.

  • If Line Item A is priority 1-6, Ad Exchange is not called and Line Item A serves.

  • If Line Item A is priority 7-11, Ad Exchange is called, with the auction limited to direct deals.

  • If Line Item A is priority 12-16, Ad Exchange is called, with bids open to both direct deals and the open auction.

Examples

  • Standard 6 vs. Ad Exchange Preferred Deal: Ad Exchange is not called.

  • Standard 8 vs. Ad Exchange Preferred Deal: Ad Exchange direct deal auction called (no open auction bids)

  • Standard 13 vs. Ad Exchange Preferred Deal: Ad Exchange called, with all bidders--direct deal and open auction--considered.

Scenario 4: With preferred deals and configurable priority

Some publishers have the ability to edit preferred deal and open auction priorities for Ad Exchange line items. Once the priorities are selected, the ad serving logic is the same as in Scenario 3.

Let’s use an example where a publisher sets preferred deals priority to priority 7 and open auction bids to 10:

Configurable priority line item

Configurable priority set at 7, 10

  • If Line Item A is priority 1-7, Ad Exchange is not called and Line Item A serves

  • If Line Item A is priority 8 or 9, Ad Exchange is called, with the auction limited to direct deals.

  • If Line Item A is priority 10-16, Ad Exchange is called, with bids open to both direct deals and the open auction.

Examples

  • Standard 7 Ad Exchange Preferred Deal at 7/10: Ad Exchange is not called.

  • Standard 8 vs. Ad Exchange Preferred Deal at 7/10: Ad Exchange direct deal auction called (no open auction bids)

  • Standard 13 vs. Ad Exchange Preferred Deal at 7/10: Ad Exchange called, with all bidders—direct deal and open auction—considered

Step 3: Determining if Ad Exchange serves an ad

If DFP calls Ad Exchange in Step 2, eligible Ad Exchange ads compete with Line Item A on a CPM basis.

  • If the Ad Exchange ad has a CPM equal to or higher than Line Item A’s CPM, the Ad Exchange ad serves. If not, Line Item A fills the impression.

  • Eligible Ad Exchange ads are constrained by the settings of the Ad Exchange line item. For example, if Line Item A at priority 7 is only eligible to compete with Ad Exchange preferred deals, then only ads that match the settings of the preferred deal are eligible, and their CPMs are those set in the deal.

About enhanced dynamic allocation

Enhanced dynamic allocation is a network-level setting designed to increase your Ad Exchange revenue without compromising reservations. In enhanced dynamic allocation, Ad Exchange is called for every eligible reservation impression.

  • This is the default form of dynamic allocation for many Small Business publishers.

  • Enhanced dynamic allocation works with both Ad Exchange and AdSense.

Overview of how enhanced dynamic allocation works

If you have Ad Exchange line items targeting your inventory (with or without preferred deals), that behavior does not change. Enhanced dynamic allocation comes into play only when standard line items of a higher priority (numerically lower) than the eligible Ad Exchange line item can serve to the impression. Since it’s a network-level setting, you don’t need to make additional selections.

Here's how it works:

  1. With enhanced dynamic allocation, DFP considers standard line items and remnant line items that can serve to the impression. It then selects the best one according to the following criteria:

    • DFP creates a "temporary CPM," or reserve price, for eligible standard line items based on the line item’s priority, progress, and historic bid data to optimize publisher revenue. 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. Therefore, a standard line item that is behind schedule will win often enough to stay on pace to satisfy its goal and pacing settings.

    • For eligible remnant line items, DFP picks the one with the highest CPM.

    • DFP sends the higher of the temporary CPM and CPM to Ad Exchange.

  2. If an Ad Exchange ad can beat the CPM or temporary CPM, then that Ad Exchange ad serves; if not, the DFP or remnant line item serves. Note that any Ad Exchange ad selected to serve will still adhere to the conditions of preferred deals or private auctions, if applicable.

An example

Your network is enabled for enhanced dynamic allocation and you use Ad Exchange with default settings. When a visitor stops by your site, an Ad Exchange line item is eligible to serve to the impression, as are a number of standard line items. The best standard line item is at priority 10. If enhanced dynamic allocation were not enabled, Ad Exchange would not be called because the standard line item is higher (numerically lower) than priority 12, and so would serve without a call to Ad Exchange. But since you do have enhanced dynamic allocation enabled for your network, DFP takes a look at eligible standard line items and calculates their temporary CPMs. (As mentioned above, this temporary CPM takes into account the line item’s priority, delivery progress, and historic bid data to optimize publisher revenue.) Of all the eligible standard line items, the highest temporary CPM is $6.50.

DFP sends this temporary CPM to Ad Exchange. As it turns out, there’s an eligible Ad Exchange ad that can beat $6.50, and so an Ad Exchange ad fills the impression.

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