An Ad Exchange is a platform (a digital one!) for advertisers and publishers to buy and sell advertising space to sell display, video, and mobile ads. It allows buying and selling across multiple ad networks. Publishers can make unsold ad space inventory available for advertisers to bid on — as opposed to traditional one-on-one sales negotiations. This is done through a software instead of the traditional negotiation.
An ad exchange is a pool of impressions where publishers put them for sale. Buyers pick up the impression they want to purchase using technologies like demand-side platforms. These are real time decisions based on information such as the previous behavior of the user an ad is being served to, time of day, device type, ad position etc.
Ad Exchanges enable advertisers to easily buy ads across a range of sites at once. This way the ad space/impression is bought directly instead of negotiating it with the publisher. This helps remove the presence of a middleman. It’s a more effective and efficient way to buy and sell advertising.
What is an Open Exchange?
As the name suggests, it is open to all buyers and any buying system can connect and access the ad inventory available on that exchange. They provide more transparency because the buyers can see the market price of an impression.
What is a Private Exchange?
As the name suggests, it is not an “open” exchange, but a private one. Publishers in private exchange open it to a few clients/advertisers instead of everyone. They control who can buy it by offering it to their certain clients. It might also cut off access to networks and other third parties that could sell those ad impressions.Publishers can also set pricing floors for inventory sold on private marketplaces. The inventory in a private exchange is considered to be of higher quality that the open exchange.
The major ad exchanges include: