In ad serving context, a passback occurs where an ad network or ad exchange can’t reach the agreed floor CPM or when no paid ads are found to deliver. Then, the network will redirect the impression back (called a “pass back”) to the publisher ad server so that it can send it to another network or display a house ad.
Passbacks are common with site retargeting networks as they only buy the ad impression if it belongs to their cookie pool.
Some illustrations of passback processes:
Passback as practised by a retargeting network:
An illustration of passback processing by DFP: