Ad Network vs Ad Exchange: The Definitions, Evolution, and Key Differences

Navigating the numerous platforms and partners available on the ad tech market can feel confusing. Some entities seem to serve the same purpose at first glance, as it is when you compare ad network vs ad exchange. Similar to the confusion over the difference between sdk and api, their places within the programmatic supply chain significantly differ and are worth explaining.

What is an Ad Network?

The dictionary definition of ad network would be that it’s a media company-aggregator, getting inventory from numerous publishers and selling it to advertisers or agencies. Mostly, it’s the display, mobile, and video inventory.

Back in the early 2000s, when media buying had become too complicated, an advertising network brought simplicity to the industry, taking the role of an intermediary between the buying and selling sides.

What is an Ad Exchange?

An ad exchange by definition is a digital marketplace that brings together all the programmatic ecosystem players and involves them in the process of buying and selling advertising placements without intermediaries.

As a quick recap, this kind of marketplace emerged as a response to the publishers’ needs to sell their remnant inventory.

Key Differences

Based on the common metaphor explaining the critical difference between these two entities, an ad network is compared to a broker, helping you buy the most prospective stocks. In contrast, an ad exchange is similar to the stock exchange itself, letting you sell or buy stocks on the market.

Now, what are the other vital aspects that distinguish these two entities, along with the different purposes they serve?

The Models and Functions

As already mentioned, ad networks are mostly the companies that manage the publisher vs advertiser relationships and help them both to get the most from media buying.

On one hand, an ad network is a go-to solution for publishers, letting them sell inventory in bulk at a competitive price. From another perspective, it helps advertisers by providing them with inventory grouped by particular criteria, like, location, demographics, or user behavior.

Ad exchanges are tech platforms open to all supply and demand participants, allowing the buy-side, including advertisers, agencies, DSPs, and sell-side, publishers, SSPs, and ad networks to participate in programmatic media buying, all integrated into SSAI.

Transparency

Ad networks emerged in the digital advertising industry to make the media buying process more manageable, but it hardly brought much transparency. Neither publishers are aware of who purchases their inventory, nor advertisers know where their ad is going to be served.

Alternatively, with ad exchanges, every party involved has access to that information. Plus, as the programmatic exchange works automatically, via RTB technology, it also brings transparency in terms of how details of each transaction are presented, further helped by the implementation of technologies such as unified id meaning.

Inventory

Advertisers can get more premium placements by partnering with an ad network, which requires paying a premium price but also guarantees the purchase of unique inventories. This is mainly true for premium ad networks.There are also topic-specific (focused on particular verticals) and inventory-specific networks, such as mobile, video, and others.

An ad exchange platform can provide specific inventory as well — you can find a display, video, or mobile ad exchange on the market. Although publishers may not get the highest price for inventory they sell via an ad exchange, they can still vend the remnant advertising placements and maximize their revenue.

Pricing

Within an advertising network, inventory pricing is set by its owner and depends on inventory value estimates. Once set, the price doesn’t change.

When it comes to an ad exchange, the price for inventory fluctuates based on the bids arising from the sell side via RTB auction. Similar to the regular auction, an advertiser who offers the highest price for ad placement wins the bid.

Takeaways

While ad networks and ad exchanges emerged as responses to different publishers’ needs, and historically addressed different issues, in some way, they complement each other in today’s programmatic media buying process.

We hope this article helped you draw a clear line between these two entities, and understand how the concept plays into the brand advertising definition.