A waterfall model does work in ad server technology, but it is becoming less common. Modern ad servers increasingly use header bidding or unified auctions, which allow all demand sources to bid simultaneously, maximizing competition and revenue.
In the waterfall model, ad requests are sent to a prioritized list of demand sources one by one, from top to bottom. If the first source doesn’t fill the request, it goes to the next, and so on. This can lead to inefficiencies because higher-paying bidders further down the list may never get a chance to bid.
The waterfall model makes sense in adservers when prioritizing guaranteed direct deals, working with limited demand sources, minimizing latency or serving as a fallback for header bidding.