Ad Network and Ad Exchanges
In the early days of online advertising, publishers and advertisers sought ways to efficiently manage their buying and selling needs, as demand continued to grow.
That led to the creation of the first ad networks. Then, as more and more websites and apps launched, there needed to be a way to connect millions of advertisers to the billions in unsold inventory. This led to the creation of ad exchanges.
One is not better than the other; in fact, almost all advertisers use a blend of both. Ad networks and ad exchange play specific roles, which mean they co-exist as a fundamental part of today’s advertising industry.
What is an ad network?
An ad network is an online platform that allows publishers to sell their inventory to advertisers and/or agencies. The inventory is typically segmented by categories that allow advertisers to target specific audiences such as age, gender or location. Ad networks are highly automated, and offer advertisers an efficient and transparent way to plan and execute advertising campaigns.
For publishers, ad networks are a way for them to sell any inventory that does not get sold directly to advertisers (this is called unsold, or non-premium inventory). Typically a publisher will connect to multiple ad networks. This gives publishers the best chance of selling all of their available inventory and generating as much ad revenue as possible.
For advertisers, using an ad network allows them to choose from a wide range of publishers, and to reach as wide an audience as possible. Thanks to the way the ad network segments this inventory, it is also a very efficient way to target specific audiences for different ad campaigns. Using an ad network also means that advertisers can execute ad campaigns on a scale and at a cost that simply isn’t feasible if they had to coordinate with each and every publisher themselves.
What is an ad exchange?
Although ad networks are a very effective way to buy and sell inventory, many publishers are still left with unsold inventory. Ad exchanges emerged as a way for advertisers creating very highly targeted campaigns to pick and choose from this unsold inventory, which is auctioned off to the highest bidder.
Today, ad exchanges act as an online marketplace where publishers, advertisers, agencies, ad networks DSPs and SSPs can buy and sell their ad inventory. By using a technology called Real-Time Bidding (RTB), the exchange sells inventory on an impression-by-impression basis. This literally means that advertisers are bidding against each other to display their advert to individual consumers that are most likely to be interested in it.
For publishers, ad exchanges have become an essential way in which they can maximise the value of their remaining inventory thanks to the way it is auctioned to the highest bidder.
For advertisers, ad exchanges have revolutionized the way inventory can be bought based on who they are targeted towards. And, because advertisers can set the price they are happy to pay for ad inventory, it means they can get the best value for their ad spend.