What is Ad Exchange?

Ad exchange is a term that defines platforms which enable the buying and selling of ad inventory (typically from advertising networks). The process of facilitating buying and selling is conducted through bidding and automatic ad placement for the highest bidders.

Ad exchanges typically operate on the basis of real-time bidding (RTB), and ad inventory is bought and sold programmatically and instantly. Publishers can set rules for minimum bids and the type of ads they’re willing to host, while advertisers can use ad exchanges in combination with demand-side platforms to decide which publishers’ inventories offer the most impressions for their target audience.

There are 3 different types of ad exchanges: open auctions (also called public marketplaces or open ad exchanges), private marketplaces (private ad exchanges), and preferred deals. Each has a different type of access for publishers and advertisers, with preferred deal ad exchanges allowing certain advertisers to get the first look of a publisher’s inventory.

The main benefit of ad exchanges for both publishers and advertisers is a more effective way to sell and purchase ad inventory. By removing the need for direct negotiation over the price and placement of ads, publishers can now earn more revenue and advertisers can host their campaigns instantly and affordably by viewing the price of impressions.