The ad ecosystem is pretty vast. You might be familiar with Google Adsense and other Ad Networks.
However, there’s more as far as online advertising is concerned.
Nowadays, there are a lot of publishers, agencies, and advertisers who are buying their media through Ad Exchanges.
This might sound confusing to you.
So, here is a post wherein we explore what is Ad Exchange and go on to illustrate the difference between Ad Network and Ad Exchange.
We also go on to show how Ad Exchange work, and what they are used for.
Simply put, here you get to know everything about Ad Exchange.
In fact, digital advertising offers some big challenges not only for publishers but also for advertisers.
While publishers face the challenge of getting the right ads at the right time, advertisers have to make sure that they get the best digital channels and mediums which can maximize their ROI.
Herein, the Ad Exchanges play a key role as they go on to consolidate millions of potential publishers and offer them to the advertisers on a single platter.
They help publishers and advertisers with easy buying and selling of ads through a transparent auction based system.
With Ad Exchange, publishers and advertisers can optimize revenue by auctioning every single impression to the buyer with the highest net bid.
Further up, Ad Exchange provides advertisers with a huge network of global advertising inventory in real time.
Plus, publishers get access to the largest pool of ad networks including integration with Google Adsense and more.
Table of Contents
What is an Ad Exchange?
Simply put, Ad Exchange is a digital marketplace that allows advertisers and publishers for buying and selling of ad space through real-time auctions.
It can be viewed as a technology platform for buying and selling of media advertising inventory from multiple ad networks.
It is technology-driven and does not involve the historical approach where price is negotiated on media inventory.
Mostly, Ad Exchanges are used to sell display, video and mobile ad inventory.
Ad Exchanges come as a transparent system wherein buyers get to see the price of each impression.
They provide a plethora of easy to use tools, multiple selling options, forecasting systems, easy interface, and much more which makes them the perfect pool of Ad Networks for advertisers and publishers.
Plus, with Ad Exchanges, you get complete control over the display of ads. So, you can easily determine how long the ad appears on your digital property.
Here’s more on Ad Exchanges.
Basically, Ad Exchanges can be viewed as a big pool of ad impressions. Here, publishers tip their ad impressions hoping someone will buy them. Buyers then pick ad impressions using technologies such as demand-side platforms.
The decisions are made real-time considering various parameters such as ad position, device type, time of day, and behavior of the user.
Ad Exchanges provide an effective and efficient way of buying and selling advertising. With Ad Exchanges, advertisers can buy ads across a range of sites at once, as against negotiating buys directly from specific publishers.
So, Ad Exchanges are perfect for advertisers and publishers who want to maximize their revenue with online advertising solution.
Here’s why Ad Exchanges are best for advertisers and publishers.
Why go with Ad Exchanges
- Ad Exchanges offer a vast pool of global ad networks. It helps to spot better revenue opportunities for your inventory.
- Ad Exchanges make use of innovative technology ensuring top-class security and positive user experience. The innovative tools make sure that the right ad goes on to the right website. You get better control on your inventory. For example, you can approve or disapprove a certain ad after reviewing it.
- Most Ad Exchanges are compatible across different browsers, devices, and varying screen sizes. Moreover, they provide a complete range of inventory including inventory on websites, in-stream, OTT, mobile app’s premium content, etc. They deliver engaging ads in all formats to a wide range of audience covering the vast geographical area.
- Ad Exchanges come with real-time bidding protocol which helps you to bid smart and maximize ROI. It takes into account various data signals, such as content types and brand reputation. Plus, they enable you to view the price buyers are willing to pay for your inventory.
- Ad Exchanges are empowered with powerful analytics and reporting tools which help you to understand the demand and price for your inventory. Moreover, they provide deep insights into your digital marketing business so that you can make most of your inventory. It functions as a revenue optimization feature for buyers and publishers.
Key Benefits of Using Ad Exchanges for Publishers
- It offers publishers the possibility for generating the highest profit using real-time dynamic allocation.
- Access to new buyers is increasing the potential for revenue.
- Effective Payment System.
- Publishers get control regarding advertisers, networks, ad formats, and bid types.
- Enhanced reporting system makes it easy to take the right decision.
Key Benefits of Using Ad Exchanges for Advertisers
- Access to real-time bidding enables them to bid on their desired inventory.
- Advertisers get access to enhanced analytical and reporting capabilities.
- Advertisers have control where their ads appear and where they don’t.
- Access to the easy payment system.
- API integration makes it accessible to the networks and agencies.
What is an Ad Network?
Typically, an Ad Network is a company which aggregates ad space available across a large section of publishers, marks up this inventory and sells to advertisers.
The best example of a large Ad Network is Google Adsense.
An Ad Network uses aggregated data and forecasts the amount of publisher inventory which is then made available for purchase to advertisers.
Ad Networks can be thought as real estate agents of the digital ad world.
Ad Networks help publishers to sell their remnant ad inventory. They were formed to cater to the explosion of publisher inventory during the internet revolution.
In short, Ad Networks collect inventory from various publisher sites and go on to sell it to advertisers at a price. They sort the entire available inventory and present it to advertisers in accordance with specific parameters laid out by the advertisers. They offer specific audience segments (such as interests, demographics, and behavior) as well as focus on pricing or scale.
What’s the problem with Ad Networks?
First of all, Ad Networks function as mediators in the selling and reselling inventory process and go on to take a cut in the publisher’s margin thereby reducing their overall profit.
Secondly, in most of the cases, Ad Networks can over or under sell on inventory. It means that publishers and advertisers are given inaccurate demand and supply data. There are inconsistencies in the ad inventory predictions.
Thirdly, there is a lack of transparency for advertisers when it comes to their ad pathway. Advertisers find it difficult to know which ad is being delivered to which publisher. So, it becomes difficult to measure results and to optimize.
Fourthly, Transparency issues also plague publishers as they find it difficult to ascertain which advertisers were making the final placement on their website. So, it becomes difficult to screen out low-quality ads which in turn damage the credibility of a publisher.
However, these complexities and inefficiencies of Ad Networks are adequately addressed by Ad Exchanges. Moreover, Ad Exchanges provide you with an opportunity to monetize your inventory better and generate higher revenue.
Ad Network vs. Ad Exchange
When we compare Ad Networks with Ad Exchanges, the metaphor of stock exchange serves the purpose well.
Here, you can assume Ad Networks to be stock brokers who offer select ad inventory to satisfy a specific need.
Whereas, Ad Exchanges function like a stock exchange and facilitate the buying and selling of inventory in an automated fashion.
1. Typically, Ad Networks are companies whereas Ad Exchanges are technology platforms.
2. Ad Exchanges base pricing on auctions whereas Ad Networks keep pricing static.
3. Ad Exchanges enable campaign optimization on the fly whereas Ad Networks take the time to optimize campaigns.
4. Ad Exchanges offer variety while Ad Networks offer specificity.
5. Ad Networks are predominantly contextual while Ad Exchanges are predominantly behavioral.
6. Ad Networks follow bulk buying and selling while Ad Exchanges follow per impression buy and sell.
7. As far as pricing is concerned, Ad Networks pricing is a negotiation based on media inventory whereas in Ad Exchange it is market led real time bidding.
As we have already explained Ad Exchanges and Ad Networks, it should not be difficult to comprehend that Ad Exchanges are more transparent than Ad Networks as they allow buyers to make out what price impressions are being sold for.
So, Ad Exchanges allow buyers to see what price inventory is selling at by aggregating impressions available. Whereas Ad Networks aggregate inventory from several publisher sources, and then go on to sell it for a profit.
Typically, Ad Exchanges are far more user-friendly than Ad Networks.
How do Ad Exchanges Work?
Typically, Ad Exchanges provide a platform for publishers where they can make unsold ad space inventory available for advertisers. Here, advertisers go on to bid on these unsold ad spaces automatically.
So, there are no traditional one-on-one sales negotiations.
The buying and selling actions are executed programmatically, which is automatic, between software platforms.
Advertisers get connected to an Ad Exchange using what is known as a demand-side platform (DSP). AppNexus, DataXU, and MediaMath are some of the major DSPs.
Here, it should be noted that Ad Networks also buy impressions on ad exchanges, then mark them up, and go on to resell these impressions to buyers on the networks.
As far as publishers are concerned, they make impressions available on an Ad Exchange through a supply-side platform (SSP).
Advertisers target audiences across a large set of publishers.
The audiences typically include users that demonstrate certain browsing behaviors or exhibit specific demographic profiles of their customers.
When a user reaches a web page or a page in an app, an ad impression is given for auction on an Ad Exchange. Then the buyer’s bidding platform analyses data from multiple sources and concludes whether to bid on the impression and how much to bid.
The data analyzed can include user’s cookies, data from the publisher, mobile identifier, mobile identifier, buyer’s own data, as well as the demographic and purchasing behavior of third-party data vendors.
By now, you would have gained much understanding about Ad Exchanges and Ad Networks, and also the general ways in which these two differ from each other.
Switching to an Ad Exchange cannot harm you in any way.
However, your success depends on your size, technical expertise, and advertisers among other factors. Moreover, your application to join should be accepted first of all.
Lastly, Ad Exchanges hold much potential as an online advertising platform and supports in boosting your returns on investment.
Ad Exchanges are still evolving, and with time they will only get better and more powerful.