Dynamic Allocation: How AdX Competes Inside Ad Manager

Every time a page on your site loads an ad slot, Google Ad Manager has to make a choice: which ad, from which buyer, at what price? For an AdSense publisher, this choice was hidden. In Ad Manager, it is visible and partly in your hands. The mechanism at the center of it is called dynamic allocation. This guide explains dynamic allocation in Ad Manager in plain terms: the line item types and priorities it works with, how it protects direct campaigns, where AdX, Open Bidding and AdSense come in, and how floors affect the result.

The question every ad request answers

When GPT sends an ad request, Ad Manager looks at everything that is eligible to fill that slot. That can include:

• Line items you or a partner have set up in Ad Manager, such as direct campaigns, house ads or third-party networks.
• Ad Exchange, with demand from Google Ads and other buyers in the real-time bidding exchange, which may include Preferred Deals and Private Auctions.
• Open Bidding partners, if enabled, which are third-party exchanges bidding server to server.
• AdSense, if it is enabled in your network.

Ad Manager then picks a winner. Two systems drive that choice: the priority of each line item, and dynamic allocation, which lets non-guaranteed demand compete with guaranteed demand on price, impression by impression.

Google is careful to say that line item type and priority are only one factor in ad selection. Targeting, pacing, pricing rules and other settings matter too. But priority is the right place to start.

Line item types and priorities

Each line item in Ad Manager has a type, and each type maps to a numeric priority. The lower the number, the higher the priority. Google's table looks like this:

A few notes from Google on how these behave:

• Sponsorship serves a defined percentage of impressions between a start and end time. It suits a buyer who wants to "take over" a page or site.
• Standard serves toward a defined impression goal, with pacing adjusted to meet it.
• Network serves a defined percentage of impressions, for partner ad networks without an impression goal.
• Bulk has an impression goal that works more like a cap, since the inventory is not guaranteed.
• Price priority serves mainly on price, with optional caps. Google suggests it for filling unsold inventory with the highest-paying line item.
• House is for promoting your own products. House line items only serve when remnant, Ad Exchange or Open Bidding demand is not available.

Among the remnant types that share priority 12, Google also ranks by type: Network above Bulk, and Bulk above Price priority.

Guaranteed vs non-guaranteed demand

The table splits into two groups, and that split is the key to dynamic allocation.

Guaranteed line items (Sponsorship and Standard) represent promises you have made to a buyer: a share of impressions or a number of impressions within a date range. Ad Manager has to protect those promises.

Non-guaranteed demand covers everything else that can safely give way when needed: Network, Bulk and Price priority line items (often called remnant), plus Ad Exchange, Open Bidding and AdSense. Google notes that any third-party ad network or exchange with a suitable ad tag can be set up as a non-guaranteed line item that competes on a price you enter, which is also how header bidding can be configured.

In an old-style "waterfall", guaranteed campaigns would simply take every impression they were eligible for, and non-guaranteed demand would only see what was left. Dynamic allocation changes that.

How dynamic allocation prices guaranteed line items (opportunity cost)

Google defines dynamic allocation as the feature that allows all non-guaranteed demand (Open Auction and remnant line items) to compete in real time with guaranteed demand, impression by impression, without compromising the delivery or revenue of guaranteed demand.

Here is how it works when a guaranteed line item is eligible for an impression:

1. Ad Manager calculates a temporary CPM, or "opportunity cost", for the guaranteed line item. This represents what it would cost to not serve it on this impression.
2. Open Auction or a remnant line item serves only if it pays more than that opportunity cost.
3. If it does not, the guaranteed line item serves.

The temporary CPM moves with the campaign's needs. Google says a guaranteed line item that is behind schedule wins often enough to stay on pace. If the temporary CPM is set too high, Ad Manager may not call Ad Exchange at all for that impression, which is why the number of impressions competing can be lower than "Eligible impressions" in reports.

When there is no guaranteed line item in the picture, the logic is simpler. Google says that if only remnant line items compete with an eligible Ad Exchange line item, Ad Exchange competes in real time with the highest CPM of the remnant line items that have not reached their goal. The higher price wins.

Some details that catch people out:

• CPA remnant line items are treated like House line items: as if they have a $0 rate, so they do not compete on price.
• Zero-rate Price priority, Bulk and Network line items with no value CPM are also treated as House line items.
• Configurable priorities. Some networks can change a line item type's numeric priority. Google advises caution: setting Ad Exchange above guaranteed line items stops dynamic allocation from considering pacing and can cause delivery problems for guaranteed campaigns.

Google sums up the benefit this way: compared with a static waterfall, letting guaranteed and non-guaranteed demand compete increases publisher yield and advertiser value.

Where AdX, Open Bidding and AdSense enter

Google lists the products that serve to Ad Manager networks through dynamic allocation:

• Ad Exchange, and Open Bidding when enabled. Demand can come from large third-party buyers, including Google Ads and other real-time bidding buyers, which may include Preferred Deals and Private Auctions.
• AdSense, which Google describes as offering fewer controls and more straightforward management, with demand from a similar set of buyers.

Open Bidding adds a server-to-server step. Ad Manager selects the best eligible line item, sends bid requests to the Open Bidding yield partners in your yield groups, and then runs a unified auction that compares their bids, the Ad Exchange bid and your line items through dynamic allocation. Google says the aim is that each impression maximizes yield.

AdSense is also eligible for dynamic allocation when it is enabled in Ad Manager at network, ad unit or line item level. But if you are moving to AdX through MCM, there is a catch: Google's MCM setup instructions say you must disable AdSense backfill before you can access the Ad Exchange feature. Our guide to AdSense backfill in Ad Manager explains how to plan that switch.

For a broader picture of what AdX is and who buys on it, see what is Google Ad Exchange.

How floors (UPR) interact

Dynamic allocation decides who competes. Pricing rules, often called unified pricing rules or UPR, decide the minimum price a bid must reach to compete at all. You find them under Inventory > Pricing rules.

According to Google, pricing rules apply to:

• Open Auction and Private Auctions.
• First Look demand.
• Third-party exchanges in Open Bidding.
• Remnant line items (Price priority, Network and Bulk).
• AdSense backfill.
• Header bidding trafficking and SDK Bidding.

They do not apply to deals negotiated through Programmatic Direct. Each network can have up to 200 pricing rules, and a rule can set a floor price or a target CPM. When two rules target overlapping inventory, the one with the higher price applies.

Two details are easy to miss:

• Floors apply after revenue share. Google says pricing rules are applied to the value of a bid that would be paid to the publisher, after removing Google's revenue share. A bid can look higher than your floor and still be filtered.
• House line items ignore floors. A House line item does not need to meet any floor in pricing rules to be eligible, which is why house ads act as a fallback.

Google also warns that incorrectly configured pricing rules can lead to delivery issues such as low fill or deals not serving. Floors that are too high do not make buyers pay more; they can simply leave impressions unsold.

What this means for a site with no direct sales

If you have no direct advertisers, most of the guaranteed machinery above will sit idle, and that is fine.

In practice, your competition will mostly be among non-guaranteed sources:

• Ad Exchange, competing in real time on price.
• Open Bidding partners, if your network or partner enables them.
• Remnant line items for other networks or header bidding, if you add them.
• House line items as a fallback when nothing else fills.

A few practical points follow:

• Keep priorities at their defaults unless you have a clear reason and a partner who understands the impact. Google itself calls configurable priorities a feature for exceptional cases.
• Price remnant line items honestly. Dynamic allocation compares Ad Exchange with the CPM you enter for remnant line items. A rate that does not reflect what the network really pays distorts the auction.
• Treat floors as a tool, not a target. Start conservatively and change one thing at a time, so you can see the effect in reports.
• Know who is managing what. Under Manage Account, your MCM partner works inside your network, including on pricing rules. Ask for a short note of any rules or line items they add.

If you later sell directly, the guaranteed line item types and dynamic allocation are there to protect those campaigns while still letting AdX compete. For how header bidding and Open Bidding differ as ways to add competing demand, see Open Bidding vs header bidding.

Next step

Dynamic allocation is the reason AdX can compete fairly for every impression on your site, whether or not you sell ads directly. Getting there starts with a clean Ad Manager network, approved sites and a good policy record. Review the requirements, and when you are ready, Get AdX access to request a review through our MCM partner network.