Programmatic advertising is an important strategy for anyone who runs an online business. It’s a powerful way to automate the buying and selling of advertisements to help ensure the best performance at the lowest price.
Ad networks and ad exchanges play a significant role in programmatic advertising and media buying. Understanding the differences between each option and when to use them can help you make the most of these adtech tools.
What Is an Ad Network?
An ad network is a company that serves as an intermediary between publishers and advertisers. Publishers sign up with an ad network and tell the network they want to run ads. They can also provide information about the types of ads they want to run and their audience.
The network then works with brands to help match them with the right publishers for their ads. Often, the network will aggregate the sale of advertising space on many sites.
What Is an Ad Exchange?
An ad exchange allows publishers and brands to connect and interact directly. The exchange does not act as an intermediary or try to help match publishers to advertisers as an ad network does.
How Do Ad Networks Work?
Ad networks are a more hands-off way for publishers and advertisers to find good advertising opportunities.
When a publisher goes to an ad network, the network collects information about the publisher’s website. It will group that publisher’s site with other sites with similar niches and audiences.
The network then works with advertisers to sell advertisements on that aggregated group of websites. When the network finds a brand looking to advertise online, it sells the advertising space based on user demographics or website content. It will collect a commission and pay money to the publishers.
These networks thrive on bulk sales, selling large amounts of advertising on many sites.
How Do Ad Exchanges Work?
While ad networks provide a service to advertisers and publishers, ad exchanges function more like a platform that publishers and brands can leverage. They serve as a digital marketplace where publishers can sell their ad space and brands can buy it.
Ad exchanges usually use automated processes and real-time bidding (RTB), meaning that brands can automatically bid for space on websites based on rules and limits they’ve set. Ad exchanges pull from supply-side platform software (SSPS), which publishers use to put ad impressions for sale, and demand-side platform (DSP) software, which advertisers use to bid on ad impressions.
Ad exchanges can also support many types of ads, such as mobile ads, banner ads, or video ads.
Exchanges are more transparent than ad networks because the publisher and advertiser interact directly instead of through the intermediary that aggregates ad space.
Ad Network vs. Ad Exchange: What’s the Difference?
Ad networks and ad exchanges are incredibly similar. They both help publishers and brands find advertising partnerships that benefit both parties.
However, one of the key differences between the two is that ad networks serve as intermediaries, grouping ad inventory on multiple websites and selling it to advertisers and brands. Ad exchanges involve more direct sales between the advertiser and the publisher rather than relying on an intermediary to group and sell inventory.
Many publishers use both services to ensure they can sell as much of their ad inventory as possible. For example, they may sell the bulk of their inventory through an ad network and place any unsold inventory on an ad exchange to ensure they get paid for that inventory.
Ad Network vs. Ad Exchange: Detailed Comparison
Here are the key differences between ad networks and exchanges.
Benefits of Ad Networks
There are many benefits to using ad networks, including:
Ease of use: With an ad network, you tell the network your advertising inventory and some basic details about your site. The network handles grouping your ad space with other publishers and finding brands that want to pay for ad space.
Pricing control: With an ad network, publishers have more control over pricing than if they use an ad exchange since their pricing is set through bids.
Value-add services: Many ad networks do more than just help you sell advertising space. Some will help you find affiliate opportunities or other monetization options for your website, thereby increasing your bottom line.
Benefits of Ad Exchanges
Ad exchanges are a popular way for publishers to sell digital advertising space to the highest bidder. Some reasons to use an ad exchange include:
Sell unsold inventory: Ad networks might be unable to fill all the advertising space on your website. An ad exchange can be an excellent way to sell the last pieces of your advertising inventory.
Transparency: With ad networks, your site gets grouped with several similar sites, and ad space is sold en masse. You better see who wants to advertise on your site if you use an ad exchange.
Control: With ad exchanges, publishers can set advertisement rules, including style and formats they’ll accept. You can also block certain types of advertising from appearing on your site. For example, you may want to block gambling-related ads even if they might typically appear on sites in your niche.
Which One Should You Choose?
If you own a website and want to sell advertising space, which should you use?
For most people, the answer is actually both. You can work with an ad network to sell premium advertising space on your website. Since networks can group your site with others and sell ads in bulk, you can often get better pricing through the network. You’ll also better predict your income when selling through a network.
You can then list ad inventory that doesn’t sell through the ad network on an ad exchange. This lets you get paid for your additional inventory, ensuring that none of your site’s advertising space goes to waste and you are maximizing your profits.
Ad networks and ad exchanges both fit a similar niche. They help publishers and advertisers build profitable relationships. Networks function as more of an intermediary, grouping ad inventory and selling it in bulk, while exchanges function more as platforms for advertisers and publishers to interact directly.
Many publishers can find a good use for both, so consider making both ad networks and exchanges part of your monetization strategy.