Ad Tech Deconstructed: What is a mediation layer?

by Katy Jensen on May 22, 2018

The world of ad tech can be confusing—that’s why we’re bringing you our Ad Tech Deconstructed series. We’re putting ad tech under a microscope to examine exactly how things work. For today’s installment, we’ll talk about what exactly a mediation layer is and how it works.

The standard structure of automatic ad buying is commonly called “the waterfall.” The waterfall organizes ad sources in a way that is meant to yield the highest CPMs for advertisers and increase revenue for publishers. A common way to increase these metrics even further is through the integration of mediation layers. A mediation layer is a service used by app developers to connect to multiple ad networks using just one tool. Effectively, it serves as an ad network organizer for devs looking to increase their revenue.

In the waterfall, publishers prioritize ad networks they work with on any given transaction based on the rates offered for that impression. A mediation layer essentially automates the optimization of this waterfall based on parameters set by the publisher. When an ad request is sent, the mediation layer quickly decides which ad source will yield the highest CPM for that impression, and the optimal ad in that network is served.

The integration of a mediation layer is meant to maximize the monetization of ads, in turn increasing ad revenue for publishers, all by increasing the quality of ads served in any given transaction. The model is also meant to keep publishers from needing to plug into multiple ad exchanges—instead, they can just plug into one mediation SDK (software development kit). This allows for more ad options without increasing latency.

Considering that the goal of mediation layers is to increase fill rates and eCPMs for advertisers, thereby increasing revenue for publishers, quality impressions are a necessity—and that’s what makes mediation layers work. By shifting ad sources around and making them compete for inventory, pubs are more likely to generate more revenue.

Have more questions about ad tech? Check out our Ad Tech Deconstructed series where we break down specific parts of the mobile advertising world to help you get started advertising or monetizing your apps.

Katy Jensen is AppLovin’s content marketing associate.