What Sotheby's and eBay Can Teach You About Unified Auctions and Mediation

Posted on May 24, 2018
By Matt Kaplan, Content StrategistContent Strategist

Every industry is (unfortunately) full of jargon, and adtech is no different. Mediation, header bidding, monetization, waterfalls and open auctions have become hot terms of late, but what do they really mean? As new technologies and related terms emerge, lots of players have jumped into the fray with their own definitions.

To help clarify matters, we’ve developed this handy list of metaphors to clear things up once and for all.

Mediation = Highway

How do you get from point A to point B? For most of us, you get in a car and drive to where you need to go. Roads and highways facilitate our travels.

Mediation platforms operate on a similar premise, connecting ad networks and their advertisers with app publishers. Like a road, mediation platforms enable all sides to be connected. Mediation, like a highway, serves as the infrastructure bringing these companies together.

To understand how mediation platforms work, it’s good to know why they exist. Most publishers - at least those serious about monetization - leverage the services of multiple ad networks (and their associated pool of advertisers). Some apps will use dozens of networks to fill all of their available ad space among all of their various end users. Mediation platforms provide publishers with a single pane of glass for managing all of their ad network partnerships, and getting ads purchased and placed from a wide array of advertisers. Instead of taking multiple small, local roads, mediation platforms are like a superhighway connecting everyone with greater ease.

Waterfalls = Telemarketing

In political campaigns, representatives have a list of specific people to call to solicit donations. They will go one by one through their list until they meet their goals. Most telemarketing works on a similar basis. The caller has a previously identified list of who to call, and will start with who’s likely to be most lucrative and then goes down the list.

In many ways, waterfalls are quite similar to telemarketing in its singular approach. Under a waterfall methodology, once an app has an ad opportunity, the call goes out to a single ad network to bid on that inventory. If the ad network doesn’t fill or respond with an ad, then another ad network is pinged to retrieve an ad. This process continues until an ad is found, all ad networks in the waterfall are exhausted or the user navigates away.

Header Bidding = Sotheby’s

Like telemarketing, waterfalls have become increasingly problematic. Many publishers now want to move away from waterfalls due to concerns related to price, speed and opportunity cost. In light of these issues, header bidding has been proposed as an alternative.

But what is header bidding exactly? Essentially, as soon as the header of a webpage is opened, all of the page’s ad inventory is made available for programmatic ad partners to bid on via a simultaneous call. For apps, this all occurs once it is first launched.

While header bidding definitely has its perks, it’s far from perfect. In particular, it typically involves only a small part of a publisher’s overall ad partners network. Exclusivity is fine for a swanky nightclub, but it can be less than ideal for app monetization - especially if well-paying networks and advertisers are on the outside looking in.

In this way, header bidding is a lot like an auction at an auction house like Sotheby’s or Christie’s. Sure, the highest bidder wins the auction, but who gets to participate? The exclusivity of such an event means that people potentially willing to pay even more for particular items don’t even get their foot in the door.

Unified Auctions = eBay

In comparison to a more exclusive auction, transactions on websites like eBay are far more inclusive. Anyone in the world with internet access can participate in an eBay auction. This is great for anyone looking to sell their wares to the highest bidder, as more inclusive auctions ensure the best price always wins.

This is the core premise behind unified auctions. They are truly open auctions, in which everyone competes for all ad placements all at the same time. This format ensures that the highest price always wins out, and that ad transactions happen in mere milliseconds.

To learn more about unified auctions and how it all works, be sure to check out our latest video on the subject: