Ad networks and ad exchanges share the similar purpose. Roughly speaking, they both gather free inventory from publishers in one place and offer it to advertisers for sale. Both can be integrated with demand-side and supply-side platforms, enabling programmatic ad buying and selling.

Thus, it’s quite hard to grasp the difference between such technology platforms, especially if you rely on your DSP having a little-to-no idea on how it buys inventory and where it comes from. The earlier you decode those concepts, the better chances you have for quick business optimization and brand strengthening.

What is an Advertising Network?

An advertising buying network is an online platform that acts as an intermediary between advertisers and publishers. It collects publisher’s inventory and matches it with demand coming from advertisers. Ad networks are able to sort inventory into categories according to the specific audience segments.

What is an Advertising Exchange?

An advertising exchange is an online marketplace where supply and demand parties (including publishers, advertisers, ad networks, DSPs, etc.) buy and sell inventory directly, without involving an intermediary. In most cases, ad exchanges use a real-time-bidding technology to run auctions and sell inventory to the highest bidder on the basis of impression-by-impression.

10 Differences Between Ad Network and Ad Exchange

For better understanding, there’s an example from the advertising industry involving people. Let’s imagine, there is a company ‘N’ that seeks for a programmatic strategist to plan and implement their advertising campaigns. There are two major solutions to choose from:

  1. Ask for a suitable candidate in the advertising agency.

  2. Directly approach a programmatic expert through the freelance marketplace.

Companies that don’t have enough time to sort out the right candidates and pick up the best one usually opt for advertising agencies. Brands that do have time, and developed the criteria and terms of collaboration go on freelance marketplaces and approach a specialist that matches directly.

Almost the same factors come into play when we talk about ad inventory buying and selling. Ad networks are better at inventory pre-segmentation but offer a closed group of impressions for higher prices. Ad exchanges, on the contrary, allow publishers and advertisers to collaborate directly and choose from an open pool of options ranging in price.

Take a look at the detailed point-by-point comparison of ad networks and ad exchanges provided in the table below.

 

Benchmark

Ad Network

Ad Exchange

Principle of Work

Acts as an intermediary between publishers and advertisers.

Acts as an open ad marketplace for all market players.

Essence

The ad network is always a company.  

The ad exchange is more of a technology for media buying.

Users

Publishers, advertisers, and agencies.

Publishers, advertisers, agencies, ad networks, other ad exchanges, DSPs, SSPs, ATDs.  

Key Characteristic

The platform offers specific categories of ads pre-segmented for serving to particular audiences. Adheres to bulk buying and selling.

The marketplace offers an open pool of various inventory. An ad exchange is based on an impression-per-impression trade.

Transparency

Advertisers don’t know which websites serve their ads. Publishers don’t know what companies buy their inventory.

Advertisers know what publishers they buy inventory from and vice versa. Pages on which ads are served sometimes can be tracked too. Some ad exchanges allow advertisers to see competitors’ bids.

Quality of inventory

Offers mostly first-tier inventory, often sold for the first time.

Offers all available inventory, including remnants (good quality inventory is oftentimes already purchased by ad networks for reselling).

Campaign Optimization

Takes time to implement.

Can be conducted on-the-go.

Pricing

The inventory cost remains stable, as it’s determined by an ad network.

The inventory cost fluctuates, as it’s based on the bids coming from advertisers during a real-time bidding auction.

Gains for Advertiser

Prices are higher because they’re determined individually, so advertisers often overpay.

Advertisers define the price by themselves.

Gains for Publisher

Publishers have less control over inventory optimization and pricing.

More control over the value of each impression.  

Examples

Google's AdSense, Yahoo Publisher Network.

SmartyAds, Yahoo Right Media.

Ad networks and ad exchanges are not the same things, they might be interchangeable but each has their own pros and cons. As an advertiser, you can take advantage of both, especially if you use a DSP for automated media buying. A DSP sends requests to multiple ad networks and ad exchanges simultaneously to find perfectly fitting inventory among all available offerings.

SmartyAds DSP is a unified RTB platform that provides the finest quality inventory for advertisers utilizing the largest supply network. Aside from the media buying process, it helps you to manage your advertising campaigns, optimize CPM, reach the right audiences, and boost your overall ad revenue. As well, SmartyAds Ad Exchange provides an opportunity for supply and demand partners to collaborate directly without having to pay extra money to intermediaries.

Our marketplace ensures brand safety, transparency, and creates exceptionally favorable conditions for ad campaign optimization.

Can’t decide Ad Network or Ad Exchange? Let our specialists help you to pick the best option for you. Contact us!

 

Written by
IRINA KOVALENKO, CMO OF SMARTYADS
December 2018