Programmatic advertising has seen a meteoric rise over the last few years and is projected to drive nearly 84% of all display advertising in the US. Programmatic advertising is the automated buying and selling of display, video and mobile ads through real-time bidding auctions, thus removing intermediaries from the process. Programmatic has made the process of digital advertising much easier and more transparent for publishers and advertisers.
With programmatic ruling the conversation in the ad tech industry, it is important for publishers and advertisers to have a proper understanding of all the platforms associated with this advertising technology. Ad exchanges are the real-time platforms driving programmatic advertising and SSPs are the seller-side platforms connected to ad exchanges. In this article, we will discuss ad exchanges and SSPs and try to figure out their difference.
An ad exchange is a digital marketplace where publishers and advertisers sell and buy ads respectively, through real-time auctions. An ad exchange is a digital pool of ad impressions. It makes seemingly infinite inventory across multiple publishers available to numerous advertisers who can then bid for each impression in real time. An ad exchange is connected to Demand-side Platforms (DSPs) and Supply-side Platforms(SSPs). Publishers make the impressions available in an ad exchange through an SSP and the DSPs, on behalf of the advertisers, automatically decide which impressions an advertiser should bid for, depending on audience targeting set by the advertiser. The ad exchange matches the advertising targeting (stored in the DSP) to the appropriate publisher inventory. Through real-time auctions, the highest bidding advertiser wins the impression.
Supply-side Platform (SSP)
A Supply-side Platform is a software used by publishers to sell ads in an automated way and to maximize the price each impression sells at. SSP is the software platform that enables publishers to sell their available inventory, fill them with ads and receive revenues from that. An SSP sends bidding requests to the ad exchanges on behalf of the publishers. The ad exchanges process the requests and allow DSPs to bid for the inventory in real-time. An SSP allows publishers to connect to multiple ad exchanges through a single interface. SSPs also offer the ability for publishers to set “price floors,” which dictate the minimum prices for which their inventory can sell to specific buyers. Publishers use SSPs to open up impressions to as many potential buyers as possible in order to maximize revenue from their inventory. This is why SSPs are also referred to as yield-optimization platforms.
Ad Exchange vs SSP
Basically, an SSP is an aggregator of publishers or ‘sellers’ and an ad exchange is an aggregator of several SSPs and DSPs. As more and more advertisers opted for programmatic advertising to acquire ads at cheap rates, there was a risk of the value of publisher inventory plummeting down. SSPs came into being to tackle this issue. SSPs help publishers to maximize revenue. Through SSPs, publishers have complete knowledge of the advertisers buying their inventory and the rates they are paying. This allows the publishers to optimize their inventory for the best advertisers. SSP is the software platforms that sends the bidding request and ad exchange is the digital market where the bid for impressions takes place in real time.
With programmatic advertising being the talk of the town in the digital marketing industry, publishers and advertisers should be habituated with all the entities associated with this technology. We hope this article has been comprehensive and will help you in your understanding of programmatic advertising.