Looking for an efficient and cost-effective way to buy and sell digital advertising? An ads exchange could be just what you need. Learn what is an Ads Exchange and how they work, and discover the benefits of this powerful digital marketplace.
The digital advertising industry is anticipated to attract $701.20 billion this year, with ads exchanges expected to play a crucial role. Ads exchanges are instrumental in facilitating programmatic ad deals, which have now become one of the pillars of digital advertising. However, the question arises – “What is an ads exchange?”
The programmatic ads industry is experiencing a significant surge, and it is estimated to reach a staggering $725 billion by 2026. Ads exchanges allow advertisers and publishers to purchase and sell ad inventory directly through real-time bidding, eliminating the need for intermediaries in the transaction.
The digital advertising landscape is complex and multifaceted, but at its core, it involves the placement of ads on digital platforms such as websites, social media, and search engines. And in order to make it possible, online marketplaces come into the picture where both publishers and advertisers connect with each other.
Publishers partner with supply-side platforms to manage their ad inventory and get the best value for their ad units. Similarly, advertisers partner with demand-side platforms to find the right target audience and run a successful campaign. But have you ever wondered who connects these two platforms? The answer is ads exchanges.
Let’s delve deeper as we try answering the most common question – “what is an ads exchange?”
What Is Ads Exchange?
An ads exchange acts as a virtual marketplace for publishers and advertisers to transact and trade digital ad space without the involvement of a third-party intermediary. Ad inventory, which includes native, display, mobile games, video, and in-app ad space, is the digital real estate of publishers.
All transactions take place in the ads exchange app. Multiple participants engage in real-time bidding (RTB) to bid on available ad inventory, with the highest bidder winning the right to display their ads on the selected ad space.
Ads exchanges are fueled by a straightforward demand and supply mechanism. Publishers seek to sell ad space on their website to the highest bidder, while advertisers look for ad units that offer optimal visibility.
Digital marketplaces are part of the programmatic advertising ecosystem, and they operate using real-time bidding (RTB) technology. Advertisers on demand-side platforms (DSP) and publishers on supply-side platforms (SSP) are connected through the exchange, enabling them to buy and sell ad space. That’s why ads exchange is a new platform of earning.
To put things into perspective, ads exchange is a metaphorical crossroads connecting publishers and advertisers. It provides a platform to sell and buy ad inventories using its connections with various ad networks and supply-side platforms.
During real-time bidding, publishers look for the highest bidder and advertisers want the best impressions to make their ad campaign successful. And this is made possible by exchanges.
Ads exchanges contain information on the availability of ad inventory and request for ad creatives to match them by conducting auctions. For publishers, exchanges push inventory to the interested buyers, allow targeting, and manage the auction. And for advertisers, ads exchanges store their targeting criteria, looks for optimal inventory, and conducts the auction. But what is real-time bidding?
We now hope you have an understood what an ad exchange is. If you still haven’t, you can listen to our podcast:
What Is Real-Time Bidding?
Real-time bidding (RTB) is a form of programmatic buying utilized by ads exchanges, as previously mentioned. This buying method entails the instant auction of ad space on a per-impression basis.
RTB differs from direct buying and private auctions because several participants can bid on available ad inventory in real-time auctions. As a result, the highest bid for each auction wins the impression.
What Is a Demand-Side Platform?
Advertisers leverage demand-side platforms (DSPs) to participate in real-time bidding (RTB) auctions.
What Is a Supply-Side Platform?
Publishers leverage (SSPs) to put their ad inventory up for auction, securing an opportunity to maximize their ad space revenue.
How Does Ads Exchange Work?
Ads Exchange work by connecting advertisers with publishers who want to buy ad space on their website or apps. However, the advertiser and the publisher must be part of the same ads exchange network for the exchange to function effectively. Here are some of the steps involved in the process of how an ads exchange work:
Step 1: Publishers sign up for an ads exchange which is the main component of programmatic advertising.
Step 2: After ads exchange login, publishers make their ad inventory available for sale and provide details about their ad space, ad format, size, and ad location on the webpage.
Step 3: the ad server sends a request to the ads exchange to locate the appropriate ad for the user based on the targeting criteria set by the advertiser.
Step 4: Once the ads exchange selects the appropriate ad from the available inventory, then it sends it back to the ad server. The ad server then serves the ad to the user’s device.
Step 5: Now, if the user clicks on the ad, the advertiser is charged the amount for the ad impression.
Step 6: Finally, the ads exchange charges a commission that is paid to the publisher.
In the process, publishers offer their ad inventory through a supply-side platform (SSP), which the ads exchange records as potential impressions. When a visitor arrives on a publisher’s page, information is collected via cookies, and the ads exchange uses this visitor data to select the most relevant bidders.
Advertisers, on the other hand, use a demand-side platform (DSP) to connect to an ads exchange. They set the maximum cost-per-impression they are willing to pay for an ad slot and other criteria that define their campaign objectives. Based on these parameters, the ads exchange matches the demand with available ad impressions.
Whenever new inventory becomes available, potential bidders are notified through a bid request, and the bidding process begins almost instantaneously. Ads exchanges sell digital ad inventory at a rapid pace and in high volumes, making them a key component of the programmatic advertising ecosystem.
A publisher connects with ads exchange directly with the help of supply-side platforms and/or ad networks. Generally, publishers expect to access good bidders for their inventory; and also to sell their unsold inventory.
In order to make a better profit, publishers allow targeting options by sharing their users’ demographics and other targeting information with exchanges. They store these details, including targeting criteria, and allow floor price settings to help publishers find suitable buyers.
Just like publishers, advertisers also connect with exchanges directly or through demand-side platforms. With the help of the DSPs, advertisers establish their target audience and set up ad campaigns. Exchanges also store the campaign requirements, signal the advertisers whenever an opportunity is available and asks them to send their bids.
Also Read – What is Google Ads Exchange: Definition, Benefits, How to Get Access, & More
Who Uses Ads Exchange?
Any entity that is an authorized buyer can buy ad inventories from ads exchanges. Most commonly, DSPs, trading desks, and ad networks buy publishers’ inventories on the behalf of advertisers. These buyers have the choice to buy inventories for static bidding. Let’s take a closer look at who most commonly buys from ads exchanges and why.
Advertisers use ads exchanges to purchase ad inventory across a wide range of websites and apps, while publishers use them to sell their ad space to a large pool of potential advertisers.
Ad networks also use ads exchanges to acquire ad inventory at scale and sell it to their clients. Additionally, demand-side platforms (DSPs) and supply-side platforms (SSPs) use ads exchanges to automate the buying and selling of ad inventory on behalf of advertisers and publishers, respectively.
Overall, ads exchanges provide a centralized marketplace where buyers and sellers of online advertising can connect and transact with one another in a more efficient and transparent manner.
What Happens After Receiving a Bid Request from Ads Exchange?
A bid request is triggered when a user visits the publisher’s website which is received by the ads exchange. Along with the bid request, ads exchange also receives data related to the user, such as location and browsing history.
The ads exchange then sends the bid request to advertisers who proceed to bid on the inventory.
After this, the ads exchange collects all the bids and chooses the highest one as the winner. Then it returns the signal to the publisher’s site and places the winning creative after retrieving it from the partnered ad server.
What Are The Types of Ads Exchanges?
There are three main types of ads exchanges – open ads exchanges, private ads exchanges, and preferred ads exchanges.
Let’s look at each of them:
1. Open Ads Exchanges
An open ads exchange is a digital marketplace that allows open auctions, and advertisers have access to a wide range of publisher ad inventory. Advertisers who aim to expand their reach would find an open ads exchange preferable, as it offers a broad list of publishers.
However, as an open ads exchange doesn’t provide comprehensive publisher information, advertisers may not have as much insight into the quality of the ad inventory they are buying.
2. Private Ads Exchanges
A private ads exchange, also known as a private marketplace (PMP), is a closed platform accessible only to premium publishers. Unlike open ads exchanges, PMPs are operated by publishers who can decide which advertisers can bid on their ad space, at what price, and under what terms.
With a private ads exchange, publishers have the ability to establish direct relationships with specific brands and advertisers, which can lead to more customized deals and negotiations. This makes PMPs a popular choice for premium publishers who want more control over their ad inventory and the advertisers they work with.
3. Preferred Ads Exchanges
A preferred ads exchange, or a preferred deal,
offers a more customized approach to buying and selling ad inventory. This type of ads exchange allows publishers to sell ad space to preferred advertisers at a fixed negotiated price.
By offering a stable revenue stream for publishers and stable pricing for advertisers, preferred ads exchanges can provide a more reliable and predictable advertising ecosystem. This approach can also help foster stronger relationships between publishers and advertisers, as both parties have agreed upon the terms of the deal in advance.
Also Read: How to Make Most Out of PMP Deals – A Guide for Publishers
How to Choose The Best Ads Exchange?
You now understand what are ads exchanges. If you want to work your way around maximising your ad revenue, relying on the best ads exchange is must. Now there are plenty of ads exchanges available, which makes it pretty perplexing to choose one. Before you finally single out an ads exchange, it’s important you weigh each option carefully.
Here’s how you do it.
Identify your Goals
Determine what you want to achieve through your advertising campaigns. Is it increasing website traffic? Or is it driving sales? And who will be your target audience? This will help you choose an ads exchange that aligns with your goals and has the right audience for your target market.
Vulnerability to Fraud
There is no denying that ads exchanges are effective in delivering personalized ads. But they can be prone to fraud due to the network of connectors and resellers.
In the programmatic realm, impressions need to pass through multitudes of platforms before they finally reach their destination, which vary in safety standards.
This can lead to misrepresented ad placements, misattributed clicks, and non-safe creatives on reputable websites.
It is important to examine an ads exchange’s anti-fraud capabilities before choosing one. Make sure the ads exchange you’re choosing comes with anti-fraud vendors which allows legit bid requests in the auctions only.
Next, it is important to make sure that the ads exchange you’re choosing are able to reach to a broader audience. Ads exchanges that support multiple connection types are better equipped to reach a broad audience and attract a diverse pool of supply partners.
By offering popular connection types like RTB endpoints, JS tags, and VAST tags, ads exchanges can drive ad revenue and offer a better experience for both buyers and sellers.
Compliance with IAB Standards
Programmatic advertising has been plagued by various types of ad fraud, with fake supplies being one of the most prevalent. This type of fraud involves scammers misrepresenting out-stream video ad slots as in-stream video slots. By doing so, they deceive advertisers into paying for ad impressions that do not reach the intended audience.
To protect against such fraudulent practices, it is crucial to choose an ads exchange that complies with the Interactive Advertising Bureau (IAB) standards. The IAB has established guidelines and best practices for the digital advertising industry to help combat ad fraud and increase transparency.
Lastly, look at the different ads exchanges that are available and compare their features, pricing, and audience reach. Consider both the size and quality of their inventory, as well as their reputation and reliability.
Top 10 Best Ads Exchange Platforms in 2023
In case you are wondering where to start, here is an ads exchange list (best ad exchange platform) with their benefits:
1. Verizon Media
Verizon Media (formerly known as Oath) is a media and technology company. It connects 800 million people (including publishers, advertisers, and users) every day around the globe. The company has a huge network of publishers, advertisers, and ad partners to fulfil the requirements of each.
Verizon Media provides simplified monetization solutions for various ad formats across multiple devices. The company also hosts in-house technology to power large publishers like TechCrunch, Engadget, and HuffPost, who are their clients.
Features for Publishers:
- Delivers high-quality creatives while maintaining user privacy by complying with privacy regulations like the GDPR.
- Comprehensive inventory management lets publishers track earnings coming via different channels—including header bidding, programmatic, and direct deals.
- The demand pool includes its own marketplace and top demand sources (including Facebook and Amazon) available in the market.
2. Index Exchange
Index Exchange is another popular ads exchange that has created a marketplace where premium digital media companies come together and exchange inventory.
It offers complete control of inventory and pricing, along with providing access to quality demand. Premium publishers like Business Insider, The Economist, and The Telegraph work with the Index Exchange platform.
Features for Publishers:
- It is certified by TAG and is a member of the Coalition for Better Ads, which shows its commitment to serving only high-quality ads.
- Offers in-house inventory integration and maintenance for better results on the buy- and sell-side.
- The company is known for transparency when it comes to bid-level auction data and earnings and for its quality of demand sources.
3. Rubicon Project
Rubicon Project (or simply Rubicon) is a global ads exchange that specializes in buying and selling inventories, facilitating over 1 billion deals every month. The Wall Street Journal, GAMELOFT, and eBay are some of the publishers who trust the Rubicon Project.
The company offers demand and campaign management for sellers and buyers. The company was also a contributor in the making of Prebid (with AppNexus), making them one of the top ads exchanges in the header bidding market.
Features for Publishers:
- It is designed for non-technical publishers. If required, publishers can also get manual assistance on request.
- It offers a unified platform where publishers can access global demand without having to go through multiple channels or services.
- Offers client-side, server-side, and hybrid header bidding solutions for better monetization.
OpenX introduces publishers to a powerful programmatic marketplace. Their trademark offering, OpenAudience, empowers publishers with insights about their respective audiences.
The company also offers yield analysts to publishers to identify the true potential of their inventories. To keep ad fraud at bay, OpenX abides by the anti-ad fraud measures. Moreover, the company was one of the contributors to the “Certified Against Malware” program.
CarGurus, Philly.com, and Graphiq are some publishers monetizing with OpenX.
Features for Publishers:
- Offers OpenX Bidder—header bidding solution that connects publishers with a premium marketplace of demand partners.
- Predicts audience volume to help publishers monetize better. Its “Real-time Guaranteed” feature is known to help publishers improve seller-buyer relationships for more profitable deals.
- It has a mobile-optimized ads exchange designed to reach buyers interested only in mobile inventory. Saving publishers time to find suitable mobile demand on their own.
SmartyAds ads exchange offers a complete ad tech solution to publishers, advertisers, and agencies. It is an independent ads exchange platform with a premium marketplace.
The company delivers more than 2 billion impressions daily while working with 25K+ premium publishers. It assures unbiased trade and quality exchange while maintaining profits for the parties involved.
Features for Publishers:
- Precise targeting by SmartyAds gets publishers the right ads for their audience.
- Real-time analytics shows inventory performance by different layouts (banner, native, video) and different devices (desktop and mobile).
- A transparent and brand-safe environment that lets publishers design their layout while maintaining various ad standards.
MoPub is an app monetization platform for publishers and developers. Now owned by Twitter, MoPub offers mobile ads exchange services. The company has a unified auction feature that enables publishers to go for direct deals, ad network services, and access to several DSPs.
The company now has 1.5 billion users across devices by working with over 49,000 app publishers around the globe. Developers like Zynga, Voodoo, Ubisoft, and Truecaller monetize via MoPub.
Features for Publishers:
- The in-app monetization feature lets publishers see real-time impressions.
- The company’s expertise in mobile mediation and real-time bidding help publishers access leading demand sources.
- Designed to show impression-level revenue to publishers, which helps them better understand the value of their inventory.
Smaato is an app-based ads exchange platform processing over 150 billion ad requests per month. The self-serve platform provides easy ad delivery with higher eCPMs.
Liftoff, Gameloft, and Outfit7 are some developers that use Smaato. It offers extensive demand, global reach, and seamless website integrations with the company’s code to drive higher revenue for publishers.
Features for publishers:
- Integrates real-time ads exchange to access dynamic demand from more than 450 sources around the globe.
- App publishers have options to access private marketplace, direct deals, RTB, and third-party mediation.
- Works with technologies like The Media Trust and GeoEdge in order to maintain ad quality standards, brand safety, and user protection.
Looking for more demand on your inventory, we can help with our partnerships with 20+ global demand partners. Learn more.
AppNexus is one of the world’s largest advertising marketplaces. For the sell-side, AppNexus offers and server, SSP, and advanced to better monetize and optimize the inventory. And for the buy side, the company has a programmable platform to run customized campaigns.
AppNexus, in collaboration with Rubicon Project, also introduced Prebid.js—an open-source header bidding wrapper. The company monetizes publishers like Fandom, Wayfair, and Ranker.
Features for Publishers:
- Uses an in-house ad server for programmatic and direct deals.
- Has an SSP that offers display, video, mobile, native, and audio ads for publishers.
- Audience extension enables publishers to ‘pack and sell’ a part of the inventory to advertisers who are specifically seeking that audience.
- The advanced analytics feature lets publishers monitor and benchmark their inventory performance to avoid underselling.
Pubmatic is a publisher-centric ad technology company. It delivers over 64 billion daily ad impressions to 800M+ unique users across the globe.
The technology is available for web, mobile, and app publishers. Publishers like Dictionary.com, Livingly Media, and Times Internet are monetizing using Pubmatic’s technology.
Features for Publishers:
- OpenWrap—an open-source header bidding wrapper by Pubmatic enables client-side, server-side, and hybrid header bidding solutions.
- Real-time bidding technology with a large pool of bidders increases bid pressure and hence publisher earning potential.
- The platform detects and filters invalid traffic to ensure brand safety.
10. Google AdX
Google runs its own ads exchange where Google Display Network partners can buy and sell ads. Google AdX comes under the umbrella of Google Ad Manager, offering third-party demand along with GDN.
It uses open auctions (preferred and programmatic deals) and private auction models (programmatic guaranteed) to make inventory exchange possible.
Google AdX is only available for premium publishers and advertisers. Small and medium publishers can access these services with the help of Google Network Partners (like AdPushup).
Features for Publishers:
- With account-level filtering, publishers can filter out the demand and creatives that they don’t want on their sites.
- Publishers can define various parameters (geography, ad sizes, layouts, ATF, and BTF ad units) for their revenue reporting and to better understand the inventory.
- Once publishers sign up with AdX, the platform handles everything from ad delivery to payments.
What are The Benefits of Ads Exchange?
Ads exchanges work as a one-stop-shop for both publishers and advertisers. It offers more advantages to both parties than just connecting them with each other. Let’s have a look at the pros of ads exchange app.
Benefits of Ads Exchange for Publishers
With the help of ads exchanges, publishers can set the floor price for their inventories. They get to choose a minimum CPM (Cost-Per-Mile) for publishers to make a fair deal.
Next, ads exchanges come with filtering options, which can allow publishers to filter ads accordingly and block certain ads, which could be sensitive or damaging to their reputation. Furthermore, these filtering options can also let publishers prevent their competitors to bid on their inventory.
Another benefit for the publishers is that they get more control over how they advertise the companies through their websites. Publishers get to present the ads in their own chosen ad format and style. Apart from that, they can also decide exactly when and where they want the ad to be displayed.
Last but not least, there are a lot of customization options in store for publishers. They can style the ads with an array of features available right at their fingertips. It includes corner styles, toggle font, colors, and the list goes on.
Benefits of Ads Exchange for Advertisers
First things first, advertisers get the ability to choose their target audience according to their business requirements, leading them to generate better results out of their ad campaigns.
Just like the publishers, advertisers also get better control, which includes advanced bidding capabilities so that they can get the best possible CPM.
Similar to the publishers, advertisers have their own set of filters when it comes to choosing the publishers they want to work with. Advertisers can blacklist certain publishers if they do not wish to work with them.
Better Ad Management
Lastly, advertisers can manage multiple aspects of their ad campaigns, such as preventing the same user to see the ad again and again. On top of that, they can also retarget multiple ads exchanges.
Now that you’re aware of the nitty-gritty of an ads exchange, let’s understand what difference does it share with SSD (Supply Side Demand).
How is Ads Exchange Different from Ad Network?
Ads exchange and ad network might sound similar to most publishers as they both manage and sell inventory. But there are differences between Ads Exchange and Ad Network.
An ad network aims to maximize publishers’ profit by selling inventory at the highest price. Whereas, an ads exchange simply wants to provide a perfect seller-buyer match.
The basic model of an ad network is to collect publishers’ inventory, categorize it, and sell it for profit. With ad networks, advertisers don’t know where their ads are going to be displayed. And publishers don’t know whose ads they are showing.
Ad network keeps all such data confined within its network (unless the publisher or advertiser asks to see the data). On the other side, exchanges are transparent. They keep the auction open for advertisers and ad agencies. Hence everyone can see the money exchanged between the buyers and sellers. Next, it connects the seller and buyer in a way that exchange is visible to all the involved parties/platforms (SSPs, DSPs, and other vendors).
Ads exchange is a bigger entity than ad network. Therefore, sometimes ad network ends up purchasing inventory from ads exchanges and gets the right to re-sell it at a profit.
For example, Google AdSense is an ad network and Google Ads Exchange is an ads exchange. Here, AdSense only gets its demand from the Google Display Network (GDN), while AdX connects publishers to a bigger marketplace of advertisers and DSPs.
What is The Difference Between Ads Exchange and Supply Side Platform?
As you already know by now that what is an ads exchange, let’s take a look at a quick breakdown of of supply side platforms.
What is Supply Side Platform?
Supply side platfrorms are the platforms that allow publishers to monetize their ad inventory by presenting it to the multiple ads exchanges. It helps increasing the competition for their ad inventory, which leads to higher prices for the ads.
Moreover, with the supply side platforms, publishers receive a host of control settings, including accepted ad categories, setting up the minimum price for an ad, and the list goes on.
How Does It Differ from Ads Exchanges?
The main difference between an ads exchange and a supply-side platform is that an ads exchange is a marketplace that connects both buyers and sellers of advertising inventory, while an SSP is a platform that is used exclusively by publishers to manage their inventory and connect with multiple demand sources, including ads exchanges.
Key Takeaways on Ads Exchange
Ads exchange is a digital marketplace where publishers and advertisers come together to sell and buy inventories.
Ads Exchange enables advertisers to easily purchase ads across multiple sites at once instead of negotiating purchases directly with specific publishers.
Compared to ad networks, ads exchanges are more transparent because they enable buyers to see the exact price at which impressions are being sold for.
Different types of ads exchanges include Open Ads Exchange, Preferred Deal, and Private MarketplaceSome of the best ads exchanges include Google Ads Exchange, AppNexus, Pubmatic, and OpenX.
We now hope you have a complete clarity on “What is an ads exchange?”
Ads exchanges enable publishers to sell their inventory to a bigger pool of buyers (ad networks, DSPs, and advertisers), conversely, advertisers get access to a large pool of ad inventories.
If you need any assistance in ad revenue optimisation for your business, get in touch with our team. AdPushup helps digital publishers generate maximum ROI from their ads on their websites. We have helped businesses achieve an average 35% increase in revenue since 2014.
Contact us today to learn more about how we can help boost your ad revenue and grow your business!
Frequently Asked Questions
Ads exchange connects thousands of publishers and advertisers by providing a platform to sell and buy ad inventories using its connections with various ad networks and supply-side platforms.
An ads exchange is a digital marketplace where supply and demand come together to trade ad inventories through real-time auctions. It gathers advertisers and publishers to sell inventory to the highest bidder.
Ads exchanges are relatively more transparent than ad networks. They enable buyers to see real-time price impressions. In fact, many ad networks now buy their inventory from exchanges.
Ads exchanges permit anyone with permission to purchase ad inventory, making it a popular choice for ad networks, advertisers, and DSPs due to the wide range of options available. Publishers also benefit from using ads exchanges as they gain access to a large pool of potential buyers and can sell their advertising space more effectively.
Ads exchanges provide a streamlined method for purchasing and selling ad inventory by bringing together advertisers and publishers in one centralized platform. Rather than having to navigate the complex and time-consuming process of negotiating with individual publishers, ads exchanges enable advertisers to easily purchase advertising space across a broad range of websites.
As a search engine giant, Google owns and operates its own ads exchange called Google Ads Exchange (AdX). AdX is an open auction platform designed to facilitate the sale of publishers’ ad inventory to premium advertisers. It operates within the programmatic advertising ecosystem, leveraging real-time bidding (RTB) technology to help advertisers bid on available ad space in real-time.
A private exchange is a platform that is exclusive to a select group of advertisers, as determined by the publishers who control the marketplace. Unlike open ads exchanges, private exchanges are closed systems that limit the number of buyers to a handful of handpicked advertisers. Publishers on private exchanges maintain control over the conditions of ad sales, such as minimum pricing and specific buyers allowed to access their ad space.
Google AdX, or Google Ads Exchange, is the largest programmatic ads exchange. Google AdX conducts the first-price auction and sells display advertising space in real-time.