Ad Exchange – The Nuts and Bolts

An ad exchange is a digital marketplace that enables publishers and advertisers to transact advertising space across display, mobile, video and audio channels.

The ad exchange buyer is typically referred to as the “Demand”, advertisers that want to reach publisher inventory and target very specific pools of audiences. Anyone is capable of connecting through a DSP and running campaigns, subject to onboarding requirements, the process can be quick and easy. There is a growing trend, large brand owners are building or acquiring in house DSPs to maintain closer control of how their advertising is managed.

The Seller “Supply-Side” represents publishers, digital content owners across all channels, websites, apps, video, podcasts etc, who are supplying advertising inventory to an advertising exchange through a Supply Side Platform (SSP). SSP’s give publishers the ability to manage the monetisation of their inventory from a broad range of demand-side opportunities.

How does it work?

An Advertising exchange is fundamentally a huge pool of advertising impressions. The number of publisher connections alongside the tools the Advertising Exchange can manage determines how successful the publisher will be.

Publisher connects their supply to exchanges which broadcast the opportunity to a wide range of demand-side buyers. The buyers will bid, in real-time on the individual impression-based of numerous data points that can be shared. DeviceID, Location, Device Type, Time of Day, Cookie Data and Ad Type are a handful of parameters that can be used to inform the buying decision and bid price. The entire process is most commonly made in real-time and takes less than half a second from start to finish.

Exchanges levelled the playing field between demand and supply. Publishers could no longer promise over-inflated audience numbers and advertisers were forced to recognise the value in good digital content. Ad Exchanges enables a harmony between supply and demand that is efficient, effective and transparent.

Where Next

The real-time bidding industry is very strong and growing. Ad Exchanges are responsible for billions of ad impressions to millions of advertisers. The focus of the industry is now on a transparent partnership set against clear ROI expectations. Ad Exchange technology is robust and evolving allowing for demand and supply to connect in ever more efficient ways.