Ad Network vs. Ad Exchange: Key Differences and Similarities

Ad networksOpens a new window and ad exchangesOpens a new window are two components of the programmatic advertising ecosystem. They are often used interchangeably, mistaken due to their role in media buying. In this article, we help you to steer clear of the confusion.

If you’re familiar with the programmatic advertisingOpens a new window ecosystem, you’re no stranger to ad networks and ad exchanges. If not, the explanation for both terms could sound similar. The confusion is apparent as both facilitate the media buying process.

Despite the resemblance in their purpose, ad networks and ad exchanges have a distinct role in the advertising ecosystem and function differently. In this article, we will look at the differences between an ad network and ad exchange to clear the confusion.

Note: Besides enabling brands, advertisers, agencies, and publishers to buy and sell ad inventories, there’s no similarity between an ad network and ad exchange.

Learn More: What is Advertising Technology (Adtech)? Definition, Ecosystem, Programmatic, & TrendsOpens a new window

Ad Network vs. Ad Exchange: Everything You Need to Know

1. Definition

Ad Network: An ad network is an aggregator that collects ad inventory from publishers and sells it to advertisers. It acts as an intermediary.

Ad Exchange: An ad exchange is a digital marketplace where advertisers and publishers purchase and sell ad inventory directly. Ad exchanges don’t involve an intermediary.

2. Evolution

Ad Network: As the digital advertising industry exploded in the late ‘90s and early 2000s, it became exceedingly difficult for publishers and advertisers to manage the buying and selling of ad inventories. Ad networks brought order to this chaos by routing transactions through them.

Ad Exchange: Despite ad networks simplifying the media buying process, publishers were often left with unsold inventory that they had to sell at a lower price.

The emergence of ad exchanges introduced a platform that allowed publishers to sell their remaining inventory to advertisers. Agencies and advertisers, on the other hand, could now buy ads per impression with enhanced targeting capabilities through the real-time bidding (RTB) process.

3. How Does It Function?

Ad Network: Ad networks are typically organizations that aggregate and curate publishers’ ad inventories, sell it to advertisers, and charge a commission. Ad networks do the legwork for advertisers by segregating ad inventories on criteria such as demographics, behavioral characteristics, or context. Ad inventories are bought and sold in bulk.

Ad Exchange: An ad exchange is a platform (in the technological sense) that enables advertisers, agencies, demand-side platforms (DSP), publishers, and supply-side platforms (SSP) to participate in the transaction. The media buying process is highly transparent since the ad impressions are sold in real-time through a software application.

4. Analogy

A common analogy given to explain the differences between ad networks and ad exchanges is as follows:

Ad Network: Ad networks are like stockbrokers in the stock market that help you buy the right stocks according to your requirement.

Ad Exchange: An ad exchange is like the stock exchange itself, allowing you to buy or sell stock in an open market.

Learn More: What Is a Demand-Side Platform (DSP)? Key Features, Architecture, and ExamplesOpens a new window

Ad Network Versus Ad Exchange: A Comparison

Here are the key comparison points in the table below:

Learn More: What Is a Supply-Side Platform (SSP)? Definition, Features, Companies, and ExamplesOpens a new window

Which One Should You Choose?

A commonly asked question is, “So, which one’s better?”

Both – ad networks and ad exchanges are a part of programmatic advertising. So, there’s no one answer. If you want to buy ads in bulk, ad networks are the right choice, whereas, if you’re going to keep your ad campaigns more dynamic, choose an ad exchange.

You can consult an expert to help you choose the right option or if you have any questions about ad networks or ad exchanges, ask us on TwitterOpens a new window , FacebookOpens a new window , and LinkedInOpens a new window