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The programmatic advertising model heavily relies on ad networks and ad exchanges. Understanding their roles is critical when generating marketing strategies for both publishers and advertisers.
This is significant given that global programmatic ad sales are expected to reach $724.8 billion by 2026. The number of internet users is estimated to reach 5.3 billion by 2023.
This article compares ad network vs. exchange features and pricing models. Furthermore, it will help you develop a suitable digital strategy for your business.
In this guide, we’ll cover the following:
An advertising network serves as a go-between for advertisers and publishers. It collects publisher inventory and fits it to advertiser demand.
Inventory in ad networks can be classified based on audience segments. Advertisers and publishers can engage and transact faster thanks to ad networks.
Through programmatic advertising, ad networks can help more people see ad campaigns. Behavioral targeting techniques existed before real-time bidding (RTB).
However, RTB has made it easier for marketers to reach their target audiences. Publift, Google AdSense, Adcash, and AppLovin are among the best ad networks.
An ad exchange is a system that serves as a digital marketplace. This is where online publishers provide ad space for which advertisers can bid.
Ad purchases are made automatically and autonomously on the platform. Ad exchanges hold and sell inventory based on real-time bidding technology (RTB). Examples include Microsoft Advertising Exchange, AppNexus, and Google’s DoubleClick Ad Exchange.
Ad networks receive ad inventory from publishers and sell it to marketers. Alternatively, ad exchanges let publishers and advertisers directly exchange ads.
Ad networks can also be viewed as an intermediary between publishers and advertisers. Users’ demographics and online behaviors are used to filter ad inventories. As a result, this ensures that ads reach the intended audience.
For example, users searching for such items on platforms like Google or Facebook are more likely to see your ads.
Ad exchanges are technology platforms for buying ad space. They are not considered intermediaries. Ad exchanges can carry out the functions of multiple ad networks since they function as an open marketplace. This gives advertisers a fair chance to bid on and purchase available inventory.
Now that you understand what ad networks vs. ad exchanges are, we’ll get into a detailed comparison. This will help you get one step closer to choosing the right option.
When it comes to ad network vs. ad exchange, there are significant differences; some of the ad network vs. ad exchange differences are discussed below. They include;
The 1994 introduction of the first clickable web ad banner sowed the seeds of digital advertising.
The first ad network appeared a year later. The goal was to help businesses manage their business relationships with advertising agencies on a larger scale.
More websites came online as time passed. Publishers still needed help manually selling their remaining inventory (ad impressions) through ad networks.
Right Media was formed in 2003. This was the first ad exchange in the world. Ad exchanges allowed publishers to advertise their unsold ad inventory much faster (compared to premium ad networks).
They used automated real-time bidding technology. Publishers were given more control over who their ad campaigns targeted.
Most ad networks provide their users with no transparency. Advertisers are typically unaware of when or where their advertisements will appear. They don’t know how much of their budget will be used.
Furthermore, publishers lack inventory optimization control. They are unaware of advertisers or their movement patterns.
In contrast, ad exchanges make the media buying process completely transparent. Ad exchanges allow advertisers to see which transactions and inventory cost changes are made. Advertisers and publishers are aware of each other’s transactions.
Ad networks only provide advertisers with premium (higher quality and higher priced) inventory options. Ad exchanges, on the other hand, provide premium and additional unsold inventory options.
Ad networks make their money by either raising the price of their inventory or taking a cut of the ad revenue.
Ad exchanges operate in a slightly different manner. They offer three pricing plans:
Setting up your inventory costs a set fee. Typically, this is non-refundable.
Once their inventory is sold, publishers pay a percentage to the exchange platform.
Advertisers also pay a percentage commission to the exchange platform for the inventory they purchase.
Ad networks serve both advertisers and ad agencies as their target audiences.
Ad exchanges serve these users. Demand-side platforms (DSPs), supply-side platforms (SSPs), and ad networks also help the audience (though this is less common).
A DSP platform allows advertisers to buy inventory from various ad exchanges. Advertisers can use a filter on this platform to find any inventory.
Alternatively, an SSP platform for publishers connects multiple ad exchanges. As a result, publishers distribute their advertising inventory across multiple platforms.
You charge a fixed premium price to ad networks, which keeps inventory costs stable.
You can also charge depending on the number of impressions/click-throughs (CPM or CPC). In other words, you get paid based on how frequently an ad is displayed or clicked on your website.
This differs from ad exchanges, where the inventory cost changes. Here, the price is determined and auctioned to the highest bidder.
Because premium inventory prices on ad networks are fixed, there is no bidding process here. Ad exchanges, on the other hand, provide real-time bidding (RTB) auction options like in-app header bidding.
They include mobile browsers, in-app, and content recommendation ads. In addition, there are native and display ads (images, videos, text, or GIFs).
Offer higher-quality inventories at higher prices from well-known publishers.
Entail pre-segmented and niche-specific ads, such as fashion, pets, or cars.
Provide a broader range of lower-cost inventory. There needs to be more transparency regarding which websites serve which ads. Despite having a wider audience, the traffic quality might be low.
Offer inventory centered on specific formats, such as mobile or video ads.
Media owners, like publishers, use these networks to promote their products or services.
They include;
All buyers have access to an extensive inventory from various publishers. Buyers need to be given detailed information about publishers. As a result, security is weak, which increases the possibility of ad fraud.
Publishers have complete control over bid pricing, terms and conditions, and who can place them. Ad networks are also not permitted to resell the publisher’s inventory.
Publishers can sell ad inventory to preferred advertisers at pre-negotiated pricing. If the advertiser declines the inventory, it is auctioned off in real-time.
Ad networks have paved the way for the dawn of a new era in digital advertising. Scalability is almost limitless for marketers and inventory owners.
This has simplified the design and tracking of marketing campaigns. Subsequently, the entire programmatic advertising industry has benefited.
Is there any benefit when it comes to ad network vs. ad exchange? Below are some reasons why ad network is still essential;
Advertisers can use ad networks to reach specific audiences, track ad performance, and change bids. Publishers can manage their entire inventory in one location and maximize every sale.
Advertisers can quickly place ads across various platforms. Publishers can also sell dozens of spots at the same time. A third-party network will provide the analysis of marketing and monetization strategies.
A typical advertising network is more than just a database. It is a comprehensive collection of marketing software and integrations. Imagine Adsterra or Facebook Ad Manager and the robust toolkits they provide.
Ad exchanges give publishers the most competitive price for their inventory of ads. At the same time, they enable interaction between advertisers and their target audience.
The ad network has a growing list of publishers who have inventory and are willing to sell it to buyers for a higher cost. However, this depends on which buyer is willing to pay the most.
In exchange, publishers sell traffic to advertisers through ad views and clicks. The better they are at trafficking sales, the more appealing they are to advertisers. This strategy also boosts the authenticity of the ad network.
Advertisers specify their requirements, such as the amount they are willing to pay. They frequently use an ad network’s campaign-management panel to set up the campaigns directly.
The advertiser’s campaign includes a target audience, budget, frequency caps, and other details. An ad network estimates the amount of traffic it will receive. Based on the targeting and budgets of advertisers, it also analyzes how competitive it will be. It then recommends optimal bids.
The ad-network codes are installed on the publisher’s website. Then they decide how much website space they’re willing to sell. Some ad networks allow you to set your minimum CPM rate.
The system automatically places the ad on the most appropriate platform if an advertiser creates a campaign.
Ad networks employ algorithms to match the highest-bidding offer with the publisher’s traffic. The highest bid may change depending on the season and traffic performance.
The ad network displays the advertiser’s ad campaigns to the publisher. All conversion data is sent back to the advertiser. The advertiser monitors their performance as soon as users engage with the ad (e.g., ad views or clicks).
Think of an ad exchange as a distinct entity to fully understand its concept and how it functions. It is not to be confused with an ad network. Ad exchanges, as opposed to ad networks, provide broader trading flexibility.
An advertiser will also use a DSP to attach to an ad exchange in search of available areas.
When a user visits a publisher’s website or mobile app, an ad proposal is sent to multiple exchanges. A DSP is also transmitted through the publisher’s ad server.
When an ad request is sent, the ad exchanges send a bid proposal to the DSPs simultaneously. DSPs examine the request to decide whether the advertiser is interested in that impression. The DSPs will respond to the ad exchange with the relevant data if it is.
The ad exchange analyzes the information to determine the most appropriate bidder for that inventory. This assists in identifying advertisers who need to meet the necessary criteria. For instance, it prevents beer ads from being presented on a website about children’s toys.
The exchange chooses the highest and most appropriate bidder, and their ad appears on the publisher’s website. This entire process takes place in a matter of milliseconds.
If you’re still unsure how ad exchanges work, imagine them like a stock exchange, where you can buy and sell stock in real-time on an open ad market.
Ad placement is made up of ad networks, ad servers, and ad exchanges. It is common for advertisers and publishers to get them mixed up.
We’ll look more closely at the definitions and differences between the concepts. We already understand how to create an ad network. Let’s now look at two additional ideas: ad servers and exchanges.
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Google Ads is an advertising service that permits businesses to show ads in Google search results and on its advertising network.
An ad network is a technology space that facilitates the exchange of advertising inventory between publishers and advertisers. It is a term primarily used for digital media and online advertising.
Ad networks and ad exchanges serve similar functions. Both obtain free inventory from publishers in one location and sell it to advertisers. Both can be incorporated with demand- and supply-side portals. This allows programmatic ad buying and selling.
It’s challenging to compare ad network vs. ad exchange. The sooner you untangle those concepts, the better your chances are. An ad network will facilitate and scale your marketing, whether you publish an ad or sell inventory.
Ad network vs. ad exchange works with different types of inventory. It is critical to examine the size of the ad network you select. This will be responsible for a consistent flow of clients from inorganic (paid) sources.
The future of ad exchanges appears bright. This is possible because leading brands and companies are already focusing on digital advertising. Pick an ad exchange if you want accountability and the power to make more dynamic advertising campaigns.
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