What is Dynamic Allocation and How it works in Google Ad Manager Formerly Known As DFP?

What is Dynamic Allocation and How it works in Google Ad Manager Formerly Known As DFP?

DFP Dynamic allocation is a mechanism to maximize your remnant and Ad Exchange revenue without compromising direct Campaigns.

With dynamic allocation, both remnant Line Item Type in DFP ( Network, Bulk, Price Priority) and Ad Exchange line items are given a chance to serve if Ad Exchange/AdSense is eligible for the request. 

Dynamic Allocation gives maximum CPM for the given request that is coming inside DFP.

By Default Dynamic Allocation is active at a network level in Google Ad Manager (DFP)

How Dynamic Allocation Works?

To understand Dyanamic Allocation you need to understand Ad Selection in DFP.

Line item Types in DFP and Their Priority  

Guaranteed Line item:

  • Sponsorship
  • Standard

Non-Guaranteed Line items

  • Network
  • Price Priority
  • AdExchange
  • Adsense
  • House

Ad Selection Process in Google Ad Manager (GAM) formerly known as DoubleClick For Publisher (DFP)

Consider below Scenario:

  • Sponsorship Line item running on RON and is already over pacing.
  • Standard Line item also targeting same ad units and is on Target which has CPM of 1$
  • AdExhange and Adsense Line item is also set up in DFP targeting RON. (Consider CPM in between 1$ to 2$)
  • Price priority Line item with CPM 1.2$ targeting RON inventory
  • Bulk Line item with CPM 1.2$
  • Network Line item with 100% Goal and CPM 1.2$.
  • House Line item 1 with 4$ CPM and with 100% of remaining inventory. House Line item 2 with 3$ CPM and with 100% of remaining inventory.

By checking the overall setup, 

We might think that House Line item with 4$ CPM or Sponsorship or Standard Line item will win the impressions.

Well, unfortunately, you are wrong. 

Let’s Consider the flow of request and ad selection in DFP

1) When Request is reached out to DFP, DFP will firstly check Guaranteed line items (Standard and Sponsorship).

2) DFP will try to set up tempory CPM which is also known as “Opportunity Cost”, Temporary CPM will be calculated based on Goal Delivery, End Date, Frequency Cap.

3) If the Line item is already delivering more than expected then temp CPM will be less if the Line item is under-delivering the Temp CPM is More. This is set up by DFP and We can’t manually edit it nor we can check what was temp CPM.

4) Based on our Sponsorship And Standard Line items, Our temp CPM will be close to 0$, Since Line items are over pacing. Consider for this example our temp CPM is 0.10$

Now with the use of DFP Dynamic Allocation, DFP will check all non-guaranteed line items.

5) If All non guaranteed line items types Network, Price Priority, Bulk are eligible to serve and there is no AdExchange or Adsense line item in competition, DFP Will select line item based on Goal Type

So the priority of line item will be as follows

  • Network: % Based Goal
  • Bulk: Impression Based Goal
  • Price Priority: Unlimited

Important About House Line item:

It is important to note that the house line item will be eligible at last since it has the priority of 16 and when there is nothing to serve, the house line item will serve. If there are more than 1 house line item, You can use CPM values to arrange the priority between House Line item, It will not affect the rest of the ad selection.

so In our above example of a house line item, Even though House line items have CPM 4$ and 3$, House line items will not be eligible in competition.

However when it comes to result where Only House Line item is eligible to serve, 

House Line item 1 with 4$ will win the inventory and serve ads.

To Sum up about the line item selection and decide which will be winning line item

So based on our current scenario, where Ad Exchange or Adsense is connected in your DFP (1.1$)

  • Sponsorship and Standard line item: Temp CPM 0$
  • Network 1.2$
  • Price 1.2$
  • Bulk 1.2$
  • House 4$
  • Adexchange/Adsense 1.1$

Winning Line item will be Network Line item

Multiple AdExchange Or AdSense line items in DFP

If you have Adsense and Adexchange Line item, Both line item will not compete with each other, Similarly, if you have two Adx exchange Account Linked to Your DFP and your Own Adsense Line item.

DFP will choose the line item randomly without taking note of previous CPM or highest CPM.

DFP Dynamic Allocation

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