What he is trying to say is the ad network charges a company for a certain amount of ads and when there are no more ads left they don't show anything.
Let's say I purchased 10,000 banner impressions per month from an ad network, and let's make it easy, lets say I was the ad networks only client. So this ad network can only give publishers 10,000 banner impressions per month but between all it's publishers the network has 15,000 impressions per month. So the network serves the 10,000 impressions and after that they don't serve anything because I have only paid for 10,000.
So the next 5000 impressions the ad network recieves would go to the publishers default (2nd tier) ad network.
I hope I simplified things for you, I hope I didn't confuse you even more
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