Key Points

  • Ad exchanges are like giant marketplaces where publishers and advertisers do business in real-time.
  • The line between ad exchanges and other ad tech tools has become blurred over time.
  • Ad exchanges don't really exist on their own anymore, but as part of other tools like SSPs or monetization platforms.

It used to be a lot easier to define the parts of the ad tech stack. Ad networks were ad networks, demand-side platforms (DSPs) were DSPs, and ad exchanges were ad exchanges. But then, Supply Side Platforms (SSPs) came onto the scene and header bidding happened. Old tools were acquired by ad tech giants and rolled into more comprehensive offerings. 

And questions like, "What is an ad exchange?" got a lot harder to answer. Still, we can take a high-level look at what ad exchanges are and how they benefit publishers in a post-header bidding ad tech landscape. And that's exactly what we do in this post. Read on to learn more.

Sick of worrying about all the ad tech terminology and tools? You can put all of that in the past when you partner with Playwire. We'll handle all the technical stuff and grow your revenue while you focus on your content. Contact us to learn more.

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Ad Exchange Resource Center

Check out all the available resources in The Complete Ad Exchange Resource Center

Ad Exchange Defined in Plain English

What is an Ad Exchange?

Ad exchanges are large digital marketplaces where publishers sell their digital ad inventory to media buyers (advertisers) - it's sort of like a stock exchange but for ads. Most of these sales occur via real-time bidding (RTB) auctions. In other words, the buying and selling of ad inventory on ad exchanges is done programmatically. 

Ad Exchanges vs. Ad Networks

The definition of ad exchange has become somewhat blurry as ad tech has developed. That's partially because there are a lot of similar-sounding tools and platforms that perform similar but distinct functions. A great example of that is the ad network. Despite the similar name, ad networks are not the same thing as ad exchanges. 

An ad exchange is more like a marketplace or a shopping mall - publishers are selling their wares within the ad exchange, and advertisers are buying them. An ad network, on the other hand, is a middle man. This is a business that buys ad inventory directly from publishers at the lowest possible price and then resells it to advertisers at the highest possible price.

Ad networks make money from the spread between what they buy the advertising inventory for and what they resell it for, while ad exchanges take a small but consistent amount of each dollar that flows through the system. That means ad exchanges have an interest in helping publishers sell their inventory at a higher amount, while ad networks would prefer that publishers make less money per ad. 

Ad Exchanges vs. SSPs

While originally ad exchanges and ad networks were quite different, ad exchanges and supply-side platforms (SSPs) do something very similar and always have. The key difference is that ad exchanges came onto the scene well before SSPs. Publishers once used ad exchanges to send their inventory into several ad exchanges at once, broadening their demand and increasing their CPMs, and then they used SSPs, which had by then absorbed many of the major ad exchanges, to plug into demand from DSPs.

That has changed slowly over time. You can still use SSPs to plug into multiple ad exchanges, but many of the larger SSPs have started to function in much the same way as ad exchanges. Their technology has always been similar, but as they have grown, SSPs have started trying to get in on the ad exchange business model.

The end result for the publisher isn't all that different. As long as you have integrated a large enough number of demand sources - whether that's via SSPs or ad exchanges - you will create enough competition for your inventory to drive up your CPMs.

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Ad Exchange Guide

Ad Exchanges: The Complete Guide for Publishers

What You Might Really Be Looking For

Here's the thing: Ad exchanges don't really exist on their own anymore. In almost every case, they're a part of another tool. But publishers still get the words "ad exchange" in their heads and start looking for information on them. If you're searching for an ad exchange, you may actually be looking for one of the following tools.

  • SSPs. SSPs offer comprehensive inventory management tools that enable you to connect your ad space with demand for that ad space. Many SSPs absorbed ad exchanges when they entered the market, so the functionality of the two types of tools is highly similar.
  • Google Ad Manager (GAM). If you're a larger publisher with direct sales who is looking for a comprehensive tool and broad demand, you're probably looking for something like GAM and not an ad exchange. GAM has rolled Google ad exchange (Google AdX, previously known as DoubleClick Ad Exchange) into its services, so you're likely to find everything you're looking for in GAM.
  • Publisher monetization tools. Because the ad tech stack for publishers has become so large and difficult to manage, some companies, such as Playwire, have combined all of the tools - including those that have ad exchange-like functionality - into user-friendly monetization platforms.

Types of Deals Available

Understanding what an exchange is means understanding that there are multiple flavors of deals that happen in an ad exchange. Here are the types of deals you need to understand as a publisher.

Open Ad Exchanges

Most ad exchanges are open exchanges. As the name suggests, open exchanges allow pretty much anyone to buy publishers' inventory. These exchanges are also called public marketplaces and open auctions. 

An open ad exchange comes with a certain degree of anonymity, as well as an enormous number of impressions for advertisers to bid on, but that is part of the reason why they have fallen victim to ad fraud.

Private Marketplaces

Also called private marketplaces (PMPs), private ad exchanges are the answer to the ad fraud and brand safety problemsthat open exchanges can pose. These exchanges allow only select advertisers and publishers to use them, meaning there's a vetting process that can prevent some ad quality and fraud problems.

A private ad exchange has less ad inventory and fewer buyers, but because there's a more direct relationship between the two sides and more guarantee of ad quality, the CPMs in these exchanges can be higher.

Preferred Deal Exchanges

Preferred marketplaces or preferred deal exchanges are a subtype of PMP. In these exchanges, publishers can sell their inventory to a shortlist of preferred buyers. This is an exclusive arrangement that leads to exclusively high yield, but you have to be a well-known publisher to perform well on preferred deals alone.

Ad Exchanges: Essential to Any Publisher's Revenue Strategy

What is an ad exchange? In addition to being a large digital marketplace that facilitates programmatic ad buying and selling, it's a key part of your ad revenue strategy if you hope to keep your business growing. Just know that it is likely rolled into another digital advertising tool these days.

Like many other ad tech tools, ad exchanges (or the tool you choose to fill the functionality) can become hard to manage when you're a busy publisher trying to create great content and keep the lights on. That's why so many publishers partner with Playwire to handle ad exchange integration and management, as well as dozens of other pieces of a fully formed revenue amplification strategy.

We can grow your revenue - plain and simple. Contact us to find out more about how we'll do that.

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