Ad mediation is operated through ad mediation platforms, in which publishers can access multiple ad networks to find the best, most profitable ad to fill their ad inventory. These mediation platforms are programmed in software development kits (SDKs) and integrated into apps before launching. There are mainly two types of ad mediation techniques used.
Waterfall bidding is the traditional way of auctioning and serving ads, in which publishers have more control of the ad networks they wish to give inventory access. When the SDK signals a bid request to the ad mediation platform, the platform determines which ad networks are most suitable for placing a bid and ranks them in the order of their preference. Afterward, the ad mediation platform goes down the list and requests a bid, one at a time, from each ad network. If the higher-ranking ad network does not fulfill the request, it is passed on to the one right after. Mediation platforms continue this process until there is an ad network that offers an acceptable bid. Any ad networks that are ranked lower, regardless of if it offers a higher price or not, are automatically disregarded, and the mediation platform serves the respective ad on the mobile app.
Unlike waterfall bidding where ad networks bid one at a time, in-app header bidding allows multiple ad networks to simultaneously compete for a single ad impression without a predefined order. This system uses real-time bidding (RTB) technology to open up bids to as many demand sources as possible, and the highest bidder automatically wins the impression.
Ad mediation platforms provide convenience to publishers by centralizing multiple ad networks into one SDK that would otherwise have to be accessed individually. Not only does this speed up the bidding process, but publishers are also able to work with more ad networks. As a result, there is an increased demand and a wider range of options to choose from, which allows for a higher ad fill rate.
Ad mediation platforms are increasingly useful for optimizing revenue and cost per mille (CPM) of ads. CPM indicates the cost of an ad per one thousand impressions, and mediation platforms are able to compare the CPMs of each bid to ensure that the highest one is delivered. Using the data generated from each ad network, mediation platforms can instantaneously determine the most profitable ads and serve them in mobile apps.