Waterfalling

Waterfalling is a process used by publishers to sell all remnant inventory — that is, the ad inventory that remains unsold after direct sales have concluded.

The process is triggered when a publisher's internal sales team has been unable to fill premium ad slots through direct deals with advertisers. Rather than leave those impressions unsold, the publisher runs them through a sequential series of demand sources — networks, exchanges, or other buyers — each given an opportunity to fill the inventory in turn. If one source doesn't fill the slot, the next one in line is attempted, and so on down the chain.

The term "waterfalling" (also called a waterfall) describes this sequential, top-to-bottom flow: demand sources are initiated one at a time, one after another, much like water cascading over a series of steps.