Ad Network and Ad Exchange are not exactly the same. Here, I have provided the difference between ad network and ad exchange very clearly. Ad Networks act as “Intermediary” between publishers and advertisers to sell & buy the ad space, it should be a company. Ad Exchange is a platform and an open marketplace where any publisher can sell their ad space and any advertisers can buy the ad space on a real time basis, there is no intermediary here.
If you are going to attend any interviews related to a digital marketing job or online advertising job then you may face this question “What is the difference between Ad Network and Ad Exchange?”. Advertising networks (Ad Networks) and advertising exchanges (Ad Exchanges) do few same kind of works. So, it always confuses us. Here, we will share the detailed differences between Ad Exchanges and Ad Networks with detailed workflows.
What is an Ad Network?
Ad Network is an Intermediary company that collects ad inventory from different publishers and pre segmented the ad inventory into categories and sells it to the advertisers. Example : Google Adsense, Yahoo Publisher Network.
Publishers, Advertisers, Agencies are the common players involved in Ad Network.
What is an Ad Exchange?
Ad Exchange is an open marketplace for all advertising players. Ad Exchange is a platform or program and here, publishers can sell their inventory and advertisers can buy their inventory based on impression per impression trade. Example : Google Ad Exchange, OpenX, AppNexus, PubMatic
Publishers, Advertisers, Agencies, Ad Networks, DSP’s, SSP’s are the common players involved in Ad exchange.
How Does Ad Network Work?
After the internet became very popular, the publisher’s count increased drastically. So, a large amount of ad spaces are available to serve an advertisement. Other side, big brands understand the efficiency of digital advertising. So they are interested in buying the digital ad space. But, finding the correct publisher or finding the correct advertiser was a big problem at that time. Ad Networks taking a role to act as an intermediary between publishers and advertisers. Ad Networks are normally Agencies/Companies. They collect ad inventories from multiple publishers and categorize them into groups. Advertisers can buy the ad spaces by the pre segmented categories. So, Ad Network plays an intermediate role between publishers and advertisers.
Here, advertisers don’t know the website where their ad serves and publishers don’t know which advertiser buys their ad space. But, ad networks pre-segmented the ad inventories by demo, contextual, behavioral etc. Advertisers can choose the suitable categories for their business.
Prices are determined through negotiations and ad networks are in tier 1 level. So, prices will be higher in ad networks. Hence, advertisers need to pay more money here.
Let’s consider, a Website Or App that is connected with Ad Network called Google’s AdSense. When a user loads the website, the browser sends ad space availability information to the Ad Network (Google Adsense). Many advertisers are already linked with this ad network to buy ad space. So, if the ad space inventory is matched with the advertiser’s requirement then the advertiser can buy that ad space.
If none of the advertiser linked with the ad network didn’t buy the ad space means the ad inventory left blank. In the publisher point of view “It’s a loss”.
How Does Ad Exchanges Work?
To understand the necessity of the Ad Exchange you need continue to read the above process,
Day to day, a huge number of new websites and applications are released. So, a large amount of ad inventories are added to the ad network. Due to the excess availability of ad space and limited number of advertisers, a certain percent of the ad space left unsold. This could lead revenue loss for the publisher even if they are willing to sell the ad space at low cost. Here, the ad exchange enter into the action.
Ad Exchange is a platform that allows the publisher to sell their inventory to the advertisers connected with various DSP’s & Ad Networks in real time basis.
Let’s consider, the adsense ad network is connected with Ad Exchange called “Google Ad Exchange”. Like google adsense, many ad networks connected with the ad exchange. Also, many Ad Networks, DSP’s, SSP’s are connected with the ad exchange. In ad exchange, the buyers are categorized into different levels. [To understand this process you must read about the waterfall bidding method]. If any ad space is unsold within the google AdSense ad network, then the AdSense ad network sends inventory availability notification to the ad exchange. Advertisers from different Demand Side Platforms can participate in the real time bidding auction to buy the ad space. In this method, the selling chance for the ad space is higher. So, publishers get some money for every ad inventory.
Ad Exchange creates open pool for ad inventories from various ad networks and SSP’s. So, advertisers from various demand side platforms can participate and buy the ad inventory at low cost. Normally, the ad exchange will work impression per impression basis. Here, advertisers know about the publishers where they buy an ad space and some ad exchanges allow advertisers to see the competitors’ bid request.
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— Sridaran
Sri really the way you have explained this platform is so overwhelming to the job seekers and pursuing career in digital advertising aspirants.
Thank you so much for sharing your opinion!