It can take beginners some time to get the hang of all the jargon that gets thrown around in the ad tech industry on a routine basis. The world of digital advertising is an extremely dynamic one and keeps coming up with new technologies and ad formats every now and then. It is important for publishers and advertisers to have an in-depth understanding of all that is going on in the industry to seamlessly implement ads. We, at Blognife, understand that and are here to help you in every step of the way.
An ad exchange is a digital pool of ad impressions that publishers and advertisers use to sell and buy ads respectively, through real-time bidding. This kind of automated digital advertising is known as programmatic advertising. Demand-side Platform (DSP) and Supply-side Platform (SSP) are two softwares used by marketers and publishers respectively to sell or buy ads. Publishers make the ad impressions available through ad exchanges and DSPs automatically decide which impressions an advertiser should buy, depending on certain attributes such as where they’re served, and which specific users they’re being served to. An SSP is a software used by publishers to sell ads by connecting their inventories to multiple ad exchanges. Through real-time auctions, the highest bidding advertiser wins the impression.
An ad network stores publisher inventory and sells it to the appropriate advertiser for a price. It is not possible for any advertiser to sort through the seemingly infinite publisher inventories and pick the most feasible impressions from each publisher. This is where ad networks come into play. Ad networks present advertisers with select groupings of publisher inventory that have been picked according to the parameters that ad networks choose on behalf of the advertisers. Some ad networks offer specific audience segments (i.e. demographics, interests, behaviour, etc.), while others will focus on pricing or scale.
Differences between Ad Exchange and Ad Network
(1) Key Innovations
Ad Network- With the advent of the Internet, it had become almost impossible for advertisers to cherry-pick impressions from that huge lot of publisher inventory. Ad networks met the growing selling and buying needs of publishers and advertisers. Ad networks came up with the mechanism to sell remnant inventory and bring efficiency.
Ad Exchange- The ad exchanges have streamlined the entire process of selling and buying of ads by auctioning each impression in the real-time among numerous bidders. Due to automation and removal of intermediaries from the process, the cost of ad tech has come down.
(2) Ad Target
Ad Network- Ad networks follow the model of bulk selling and buying of ads in a predominantly contextual manner.
Ad Exchange- Ad exchanges follow the model of selling and buying on an impression-by-impression basis in primarily behavioural manner.
Ad Network- Advertisers pay the price that is agreed upon after negotiation based on the inventory.
Ad Exchange- The highest-bidding advertiser wins the desired ad impression and pays the price determined by real-time bidding in the market.
(4) Transparency Quotient
Ad Network- The ad networks lack transparency to some extent. Publishers have little knowledge about who is buying their inventories and at what price. Advertisers also do not get to know much about who gets to view their ads.
Ad Exchange- The biggest edge that ad exchanges have over ad networks is by virtue of the transparency they provide. Publishers know who is buying their inventories and at what cost, the knowledge of which enables them to optimize inventory. Advertisers have access to impression-level data to target users.
(5) Key Challenges
Ad Network- This process created intermediaries which can be expensive and unreliable. Due to the lack of transparency, publishers are not able to fully optimize their inventories. Similarly, advertisers also have little clue about the quality of the inventory and about what other options are available. The entire process can be time-consuming.
Ad Exchange- The ad exchanges often cater to low-quality remnant inventory.
(6) Key Players
Ad Network- Google AdSense, Yahoo Publisher Network, AOL’s Advertising.com are the most seasoned ad networks in the industry.
Ad Exchange- DoubleClick Ad Exchange, Yahoo Right Media, OpenX Market (OpenX), AdECN (Microsoft) are some of the biggest ad exchanges in the world.
We hope you find this article to be comprehensive and it helps you in understanding the difference between an ad network and an ad exchange.