The waterfall is the traditional [[ad-mediation]] method: demand sources are arranged in a fixed priority order and called one at a time. The mediation SDK asks the top-ranked network first; if it does not fill — or bids below its [[floor-price]] — the request falls through to the second network, then the third, and so on until one returns a paying ad. The mental image is water spilling down a series of steps, hence the name. The modern alternative, [[header-bidding]], instead asks every source to bid at once.
How a waterfall is built and tuned
- Ranking by historical eCPM — networks are ordered by what they have paid in the past, highest first, so the most valuable demand gets first refusal.
- Price tiers / instance floors — the same network is often entered several times at descending floor prices, so it can win premium impressions high in the order and cheap fill lower down.
- Manual maintenance — eCPMs drift by geo, format, and season, so the order has to be re-ranked regularly; a stale waterfall quietly loses revenue.
The structural weakness is money left on the table: a network sitting low in the order that would have paid $20 for an impression never gets asked, because a higher-ranked network already filled it at $5. Because the order is fixed rather than competitive, the publisher cannot know it captured the best price. Removing exactly this inefficiency is the whole reason [[header-bidding]] exists — see that entry for the full waterfall-vs-bidding comparison.
Despite that, waterfalls are not obsolete. Most 2026 stacks are hybrid: a unified auction runs first, and a waterfall of non-bidding networks runs underneath it for fall-through [[fill-rate]]. Plenty of demand sources still do not support real-time bidding, and the waterfall remains the mechanism that captures their fill. The skill has shifted from tuning one big waterfall to managing the waterfall tail that sits beneath the auction.