Ad Exchange vs. Ad Network: What's the difference?

Safalta expert Published by: Ishika Jain Updated Wed, 04 Jan 2023 05:08 PM IST

Highlights

The ecology of programmatic advertising has two elements: ad networks and ad changes. Due to their involvement in media buying, they are frequently used synonymously.

Understanding the role of ad networks and ad exchanges in the programmatic advertising model is essential for both advertisers and publishers when creating their marketing strategy. This is crucial because, by 2026, programmatic ad sales globally are expected to reach $724.8 billion, underpinned by predictions that there will be 5.3 billion internet users worldwide. To assist you in determining which best suits the digital strategy business, we'll evaluate the features, pricing structures, and other aspects of ad networks versus ad exchanges in this post.

Table of Content:
How Do Ad Networks Work?
An Ad Exchange is what?
What Differs an Ad Exchange from an Ad Network?
Comparing Ad Networks and Ad Exchanges in Detail
The Function of Ad Networks
The Operation of Ad Exchanges

How Do Ad Networks Work?
An internet firm or organization known as an "advertising network" links businesses wishing to promote online alongside websites that are buying ad inventory. The top advertising networks include AppLovin, Publift, Google AdSense, and Adcash. By using programmatic advertising, ad networks can increase the size and number of audiences that watch ad campaigns.

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Real-time bidding (RTB), whereas techniques like behavioral targeting always existed, has unquestionably made it simpler for advertisers to connect to their target demographic. According to some research, behavioral targeting can increase non-targeted marketing's click-through rates (CTR) by as much as 5.3 times.

An Ad Exchange is what?

A platform known as an ad exchange serves as a virtual marketplace where advertisers can submit bids for ad space that is offered by web publishers. AppNexus, Google's DoubleClick Ad Exchange, & Microsoft Advertising Exchange are a few instances. Rather than having two parties actively negotiate, ad purchases are done automatically & autonomously just on the platform depending on whatever offer is thought to be more desirable. According to some research, behavioral targeting can increase non-targeted marketing's click-through rates (CTR) by as much as 5.3 times.
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What Differs an Ad Exchange from an Ad Network?

An ad exchange serves as that of the digital marketplace wherein advertisers and publishers can buy and sell ad inventories directly, as opposed to an ad network, which gathers ad inventory through publishers and afterward sells it to advertisers. Since ad networks filter ad inventory based on factors like user demographics or online behavioral traits to help the ads reach the proper target audience, they can also be considered as the middleman between publishers and advertisers. For instance, consumers searching for used or repaired car parts on websites like Google or Facebook are much more likely to see your advertising if you sell them. Ad exchanges aren't regarded as intermediaries because they are just a technical framework for buying advertising space. However, because they function as an open market, they can perform the duties of several ad networks while providing advertisers with an equal opportunity to bid on and buy available inventory. With a better understanding of what ad networks & ad exchanges are, we'll compare them in-depth to put you one step closer to making the best decision.

                     Read More: What is an Ad Exchange and how it works?

Evolution
The foundation for the future growth of the digital advertising sector was laid in 1994 with the introduction of the initial clickable web ad banner. The very first ad network appeared a year later to assist businesses in more effectively managing their commercial interactions with advertising firms. Publishers still struggled to directly sell the remaining inventory (ad impressions) via ad networks as the years went on and more websites went live. Right Media was established in 2003 and went on to establish the first ad exchange in history. Utilizing automated real-time bidding technology, ad exchanges now give publishers more control over their ad campaigns and a speedier way to sell their leftover ad inventory than premium ad networks.

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Transparency
Most ad networks provide their users with zero transparency. Advertisers are typically unaware of the times and locations where their commercials will run, as well as the number of parties that will share in their expenditure. Additionally, publishers have limited influence over inventory optimization and are not informed of the advertisers or their activities. In contrast, ad exchanges make the content buying process transparent by allowing advertisers to see precisely which transactions & inventory pricing changes are performed. Publishers and advertisers are both aware of one another and of the transactions that have taken place.

Inventory
Inventory Ad exchanges provide premium plus additional unsold inventory options, whereas ad networks solely provide premium (better quality and priced) inventory options to advertisers.

Audiences/Users
Advertisers & ad agencies are among the target markets served by ad networks.  Along with demand-side platforms (DSPs), supply-side platforms (SSPs), as well as the ad networks which buy from them, ad exchanges also interact with these users (though this is more uncommon).

SSP and DSP
A DSP is a platform that gives advertisers and advertising agencies access to several number of ad exchanges and available inventories. Advertisers on this platform can employ a filter to view the inventory they want. As an alternative, an SSP is a network for publishers that connects many ad exchanges, enabling publishers to distribute their ad inventory across other platforms.

Monetization
Your inventory cost with ad networks stays stable thanks to the set premium price you charge. You also can charge based on the number of times an ad is displayed or clicked on your website (CPM/CPC), in which case you have compensated accordingly. This is distinct from ad exchanges, in which the cost of the inventory varies and the highest bidder is chosen as the buyer.

Bidding
There is no bidding procedure here because premium inventory pricing on ad networks is predetermined. On the other hand, ad exchanges provide real-time bidding (RTB) auction choices like in-app header bidding.

The Function of Ad Networks
A big number of publishers who are ready to sell their ad space to advertisers are gathered by an ad network. Utilizing the campaign management interface of the ad network, the advertiser configures the aspects of their advertising campaign (audience location, frequency of ads, budget, etc.). The user's information is supplied via an ad tag when a publisher submits a bid request after one visitor arrives on their website. This element holds pertinent details about the visitor and the ad space, such as the ad's placement. The ad details are delivered to the publisher's ad server when a match is made online based advertiser's campaign as well as a publisher's inventory. When an ad is accepted, the publisher adds the HTML or JavaScript tag code to their website, the ad goes live, and the advertiser may control and track it through the campaign panel of the ad network without having to alert the publisher. Ad networks might be compared to stock brokers, who assist you in selecting the appropriate securities to purchase on the stock exchange according to your needs.

The Operation of Ad Exchanges
A publisher will employ an SSP to make iit'spossible for ad exchanges to order to sell their ad space. They'll give the SSP all the data it requires, including buyer personalities, the location of the page, and the size of the price floor. Additionally, in to order to link to an ad exchange and look for open space, an advertiser will utilize a DSP. When a user accesses a publisher's website or mobile app, the publisher's ad server sends an ad request to several exchanges & DSPs  The ad exchanges submit a bid request to a DSP at the same time the ad request is sent. The information is analyzed by the ad exchange to identify the best bidder for just that inventory. This makes it easier to spot dishonest advertisements, such as beer ads that appear on a website promoting toys for kids. The highest and best-qualified bidder is chosen by the exchange, and their ad is then published on the publisher's website. The fact that this entire process takes place in a matter of milliseconds is astounding. Ad exchanges operate similarly to the stock market, which enables you to purchase and sell stocks in real-time on such an open ad marketplace if you're still unclear about how they operate. The ecology of programmatic advertising has two elements: ad networks and ad changes. Due to their involvement in media buying, they are frequently used synonymously.

What does "ad network" mean?

A technology platform known as an ad network facilitates the sale of ad inventory between advertisers and publishers. It refers only to digital content and internet advertisements.

What distinguishes DSP from an exchange?

A business that serves as a middleman between publications and advertisers is an ad network. A free market where all parties involved in advertising can trade ads. DSP: A technological platform that enables programmatic ad space purchases by advertisers.

What accomplishes an ad exchange?

A digital marketplace wherein publishers and advertisers can exchange digital ad inventory is known as an ad exchange. Publishers use this internet marketplace to sell their available inventory of ad space. By allowing for the bidding on ad space, it acts as a digital market for marketers.

Describe Google Ads. 

A Google advertising program called Google Ads, previously known as Google AdWords, enables companies to place advertisements on Google search results and throughout the company's advertising network.

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