When we talk about ad exchanges and ad networks, we are talking about two different systems with the same goal – to offer the Advertisers ad inventory that was collected from various resources. The difference between them is simple if we remember that both variants can have a programmatic element in organizing the buy-sell process.
Having some idea about purchasing inventory and where it actually comes from is important in order to have a clear understanding of your business processes. The quicker you understand how everything is designed, the sooner you can work on your brand improvement and your business optimization.
If we’re talking about an online advertising network in simple terms, it is an intermediary between such key players as Publishers and Advertisers. The former offer their inventory, the latter buy it to promote their brand and goods or services. The network itself helps to match the demand with the requirement.
Ad exchange, in its turn, can be compared with a market where all the business (requirements and demands) is staffed without any third party. The vast majority of exchanges are based on real-time-bidding (RTB) technology that allows buying impressions one by one according to their features.
If we put both trends next to each other, we will see that networks offer bulk solutions and posting on the websites where a viable audience can be found.
Exchanges invoke more personalized treatment to each impression. When it comes to the system, the Advertisers can see exactly what kind of user is in front of them, how valuable he or she is and how much they are ready to pay for particular impressions. The price can be different for a display on the same website when even one component is changed. If the Advertiser is selling children’s toys, he is likely to offer highest rates for a young mother, while a teenager will be given low prices or ignored completely. Ad network does not take such details into consideration.
The main problem of networks is that too many different ads can be combined on one page. A person is unlikely to be interested in teeth whitening, child’s upbringing and visiting clubs at the same time and, as a result, we get a terrible confusion which may distract or annoy the user. Growth of ad blocking software is solid evidence that people are tired of irrelevant content distracting them from their online activities.
Ad exchanges try to work, to cooperate with the user, showing the ads that are supposed to be more suitable and relevant for each personal experience, online behaviour, type of device and other important factors. Corresponding ads become a useful reminder to think about hobbies or buying some new gadget. All the data collected for impression estimation is anonymous, cannot give even a hint about real personality, and can be reset after the browser’s cookie files are cleaned.
Ad exchanges are highly preferred by owners of small websites with traffic less than a thousand visitors per day. Focus on each particular client makes this point less important, while some ad networks may have very strict requirements about minimal traffic amount.
Advertising via ad networks is more expensive as the company, as a third party, wants to get some money for the services provided and, thus, takes commission fees. Ad exchanges provide direct contact between key players that helps them to save some money and make the campaigns cheaper; that is especially important for small companies with limited advertising budgets.
Both of these approaches have good points and not-so-good points. Correlation between the two systems is a distinct possibility in the near future.