Understanding the roles of ad networks and ad exchanges is crucial for publishers and advertisers when creating their marketing plans, as they are essential elements of the programmatic advertising paradigm. In simpler terms, Ad networks are like helpful friends who know lots of advertisers. They take your billboard space, along with space from lots of other people’s billboards, and find advertisers willing to pay to put their ads up.
This is particularly crucial because estimates indicate that the number of internet users will increase to 5.3 billion by 2023, supporting the projection that global programmatic ad sales will reach $724.8 billion by 2026.
To assist you in selecting the option that best fits your digital strategy business, we will analyze the features, pricing structures, and other aspects of ad networks and ad exchanges in this post, and finally answer the question of which one’s better in the competition of “ad exchange vs ad network”.
Now let’s get started!
Introduction to Ad Networks
An internet firm or group that links companies wishing to advertise online with websites selling ad inventory is known as an advertising network.
Adcash, AppLovin, Google AdSense, and Facebook/Instagram Advertising are a few of the top ad networks.
Through programmatic advertising, ad networks can assist in making ad campaigns visible to a wider range of audiences. While real-time bidding (RTB) is not new, it has certainly made it easier for advertisers to reach their target demographic. One example of this is behavioral targeting.
Research indicates that when compared to non-targeted marketing, behavioral targeting can increase click-through rates (CTR) by as much as 5.3 times.
An Ad Exchange: What Is It?
A platform known as an ad exchange functions as a virtual marketplace where internet publishers supply ad space and advertisers can submit bids for it. You could think of Ad Exchanges as a big, live auction house where billboard space is up for grabs in real time.
AppNexus, Google’s DoubleClick Ad Exchange, and Microsoft Advertising Exchange are a few instances.
Instead of requiring direct negotiation between the two parties, ad purchases are performed automatically and autonomously on the platform, based on whichever offer is judged to be more desirable.
What Separates an Ad Exchange from an Ad Network?
An ad exchange serves as the online marketplace where advertisers and publishers can directly buy and sell ad inventories, as opposed to an ad network that purchases ad inventory from publishers and then sells it to advertisers.
Because ad networks filter ad inventories based on factors like user demographics or online behavioral traits to assist the ads reach the proper target audience, they may also be thought of as the middleman between publishers and advertisers.
For instance, anyone searching for used or restored auto parts on websites like Google or Facebook is more likely to see your advertisements.
Ad exchanges aren’t seen as an intermediary because they are just the technological framework for buying ad space. They can, however, perform the functions of several ad networks while allowing advertisers an equal opportunity to bid and buy available inventory because they function as an open market.
After you’ve gained some understanding of the differences between ad networks and ad exchanges, we’ll go into a thorough comparison to assist you make the best decision possible.
Ad Exchange vs. Ad Network: A Comprehensive Comparison
When it comes to ad network vs ad exchange, the following are the main distinctions:
- Audiences/users Evolution Transparency Inventory Pricing
- Types of DSP and SSP Advertising Formats Bidding
let’s go over them in greater detail.
1. Evolution:
The digital advertising sector began to take shape in 1994 with the release of the first clickable online banner.
A year later, the first ad network appeared with the goal of assisting businesses in managing their connections with advertising agencies more effectively and on a larger scale.
Publishers continued to find it difficult to manually sell their remaining inventory (ad impressions) through ad networks as time went on and new websites went live.
Right Media was established in 2003 and went on to become the first ad exchange in history. The major difference between ad networks and ad exchanges is that Ad exchanges give publishers more control over who they target with their ad campaigns and enable them to sell their leftover ad inventory faster (than with premium ad networks) with automated real-time bidding technology.
2. Openness:
Most ad networks give their users no transparency at all. Typically, advertisers aren’t told where or when their ads will run, or how many parties would take a cut of their money. Furthermore, publishers are not informed about the advertisers or their moves and have limited influence over inventory optimization.
Ad exchanges, on the other hand, make the media buying process entirely transparent by allowing advertisers to view the precise transactions and inventory cost changes that are made. The publisher and advertiser are also aware of each other and the transactions that have taken place.
Inventory Exchanges provide marketers with extra unsold inventory options in addition to premium inventory options, which are of higher quality and cost.
3. Costing:
Ad networks collect their portion of the money from the sale of ads, or they mark up the price when they sell inventory.
Ad exchanges function somewhat differently. Typically, they provide three price options:
setup costs. The cost of setting up your inventory is a one-time charge. Usually, there is no return for this.
Offer a margin call. After their merchandise is sold, publishers provide the exchange platform a commission percentage.
Purchase margin. In addition, advertisers remit a fee percentage to the exchange platform for the purchased inventory. For instance, the advertiser pays $1,000 and the ad exchange an extra $100 if a publisher buys inventory for $1,000 plus a 10% commission fee.
4. Viewers/Audiences:
Ad agencies and advertisers are among the audiences that ad networks serve.
These users are also served via ad exchanges, supply-side platforms (SSPs), demand-side platforms (DSPs), and ad networks that purchase from them (though this is less typical).
5. SSP and DSP:
An advertiser or advertising agency can access many ad exchanges and inventory that they can purchase using a DSP platform. Advertisers on this platform can view the inventory they desire by using a filter.
On the other hand, an SSP is a platform that connects several ad exchanges, giving publishers the ability to distribute their inventory of ads across several platforms.
6. Revenue Generation:
Ad networks allow you to charge a predetermined premium price, which keeps your inventory cost stable. You may also choose to charge by the thousand impressions or click-throughs (CPM/CPC), in which case you get paid based on the frequency with which an advertisement appears on your website and is clicked.
This is not like ad exchanges, where the highest bidder is sold to and the inventory cost is subject to fluctuations.
7. Putting an offer in:
Here, there is no bidding procedure because the pricing of premium inventory on ad networks are preset. Conversely, ad exchanges provide real-time bidding (RTB) auction choices like in-app header bidding.
Ad types Mobile browser, in-app, content recommendation, native and display advertisements (image, video, text, or as a GIF) are among the ad formats available to media buyers through ad networks and ad exchanges.
7. Categories:
Some types of ad networks are as follows:
premium networks. Provide premium prices on higher quality stocks from well-known publishers.
networks that are vertical. Add advertising that is pre-segmented and geared at particular markets, such as vehicles, pets, or fashion.
“Blind” or horizontal networks. Provide a wider range of less expensive inventory. You won’t know which websites are serving which ads, and while your reach will be greater, the quality of the visitors may be worse.
networks that are specialized or inventory-specific. Provide inventory that is targeted at particular media, like video or mobile ads.
Both affiliate network and performance. These networks link businesses looking to market their goods or services with media owners, like publishers or social media influencers.
Some forms of ad exchanges are as follows:
- open communication. Make a sizable collection from several publishers accessible to all purchasers. There is a higher likelihood of ad fraud because purchasers are not given detailed information about the publishers and security is lax.
- private discussions. All authority over bid terms, conditions, and placement authority is granted to publishers. Ad networks are likewise unable to resell the publisher’s stock.
- preferred transactions. Ad inventory can be sold by publishers to certain or preferred advertisers at pre-arranged set prices. The inventory is put up for a live auction if the advertiser declines it.
- After discussing the main distinctions between exchanges and advertising networks, let’s examine these options’ operational details.
How Do Ads Network Operate?
A vast number of publishers who are eager to offer advertisers their advertising space are gathered by an ad network.
By utilizing the campaign management interface provided by the ad network, the advertiser configures the parameters of their ad campaign (audience location, frequency of ads, budget, etc.).
An advertisement tag is used to transmit the user’s information when a publisher requests a bid after a visitor lands on their website. This tag includes relevant details about the visitor and the ad area, like ad placement.
Ad information is provided to the publisher’s ad server when a publisher’s inventory and an advertiser’s campaign match.
The advertiser can monitor and control the ad’s performance in the ad network’s campaign panel without having to notify the publisher once the tag code (HTML or Javascript) is accepted and placed on the publisher’s website.
Remember this simple analogy: ad networks are similar to stock brokers in that they assist you in purchasing the appropriate stocks on the stock exchange according to your specifications.
How Do Trade-Ins Operate?
A publisher will use an SSP to make its inventory available to ad exchanges in order to sell their ad inventory. They will give the SSP all the data it requires, including buyer profiles, price floor amount, and page location.
In order to find available space, an advertiser will also connect to an ad exchange via a DSP.
An ad request is issued by the publisher’s ad server to several exchanges and DSPs (if the publisher has available ad space) whenever a user visits the publisher’s website or mobile app.
Ad exchanges simultaneously submit a bid request to the DSPs at the same time as they transmit the ad request. The DSPs review the request to see if the advertiser would be interested in that specific impression. If so, the DSPs will provide the necessary information in response to the ad exchange.
The most pertinent bidder for that inventory is identified by the ad exchange after reviewing the data. This makes it easier to spot advertisers that don’t adhere to the rules—like beer advertisements on a website featuring toys for kids.
After the exchange chooses the highest and best-fit bidder, the publisher’s website displays the winning bidder’s advertisement.
The fact that the entire procedure takes place in a matter of milliseconds is astounding.
If you’re still unsure about how ad exchanges operate, compare them to a stock exchange, where you can buy and sell stocks in real-time on an open market for ads.
While understanding these procedures is crucial, what advantages may ad networks and exchanges offer your company?
Ad Network Advantages
Ad networks easily link to a vast diversity of premium inventory space, saving marketers from having to spend hours searching for content that meets their requirements. It’s done for them by the network.
Additionally, they can aid in enhancing ROI for marketers and publications alike. Advertisers can increase their reach by utilizing the connections that ad networks offer, while publishers can sell their inventory at premium pricing.
Finally, because advertisements usually have predetermined, non-negotiable rates, advertisers can rely on automated media buying and don’t have to worry about bargaining to sell their commercials. If you are not experienced in sales or negotiating, this is quite helpful.
Advantages of Exchanged Advertising
Ad exchanges provide real-time audience analytics and are quite transparent. Advertisers can see where their adverts are displayed thanks to this, which also helps them target more effectively.
Additional benefits include enhanced security and the ability for marketers to filter or remove rival or offensive or sensitive content in their adverts.
Finally, publishers can save money by choosing less expensive ads that may be more relevant to their audience, and advertisers can sell all of their campaigns—not just the premium ones.
Which Is Better, an Ad Network or an Ad Exchange?
Are you having trouble deciding if you should use an ad exchange or an ad network?
Think about choosing both.
You’ll profit in either case because programmatic advertising includes ad networks and ad exchanges.
An ad network is the best option if you want to purchase advertisements in bulk or reach a wider (perhaps worldwide) audience without worrying about the lack of transparency.
Opt for an ad exchange instead if you would rather have transparency along with the capacity to design more dynamic advertising campaigns.
Conclusion:
We highlighted some essential components in this post to assist you in selecting the best advertising plan, in short:
Compared to exchanges, ad networks have a larger publisher network, but they also have some security issues (such as a lack of transparency in the media buying process).
Since networks only sell premium inventories, ad exchanges are ideal for publishers who need to sell extra inventory. Depending on the parameters established, either choice can satisfy your demands for purchasing or selling merchandise.
Understanding the distinctions between exchanges and ad networks is crucial, but understanding is only half the fight.
