Ad Network vs Ad Exchange: Where Ads Go Speed Dating and How They Find Their Match

Hercules meets two goddesses at a crossroads, asking him to choose his path. Neo must decide between the red pill and the blue pill. A choice between two options is a common denominator in tales, movies, and our daily lives. Usually, each of them has upsides and downsides, which requires us to be as clear about our goals as possible.

In this article, you’ll see that choosing ad network vs ad exchange is no different. We’ll show you the benefits and risks of both options and explain what you are really choosing when making this decision. Although it’s not as crucial as Neo’s or Hercules's choice, it may impact your future profits and campaign performance, so let’s give this decision the attention it deserves!

Value in the Middle: What Is an Ad Network?

The world is changing, and new business models are emerging, yet there’s always a place for intermediaries if they do a good job.

An ad network is an intermediary for buying and selling digital advertisements.

It makes transactions more straightforward and convenient for publishers and advertisers who don’t want to get too deep into the technical details of the process.

Simply put, an ad network collects ad inventory from numerous publishers and then sells it to advertisers. More importantly, ad networks can sell ad inventory from different publishers as a single package. They sort ad spaces based on demographics, type of content, or other criteria and can offer advertisers a good package deal depending on their requirements.

What’s in it for all parties involved? Ad networks save time and effort: instead of managing a supply-side platform (SSP), a publisher can sell their ad inventory in bulk and get much-desired profit. Also, an advertiser doesn’t need to learn how to use a demand-side platform (DSP) or ad server because an ad network will find ad inventory for them.

Ad networks are based on sophisticated algorithms to match supply and demand with great precision. It’s like having a competent real estate broker find you the best apartment (or the best tenant) in town while you work on other important things or just rest.

Ad networks may come in many forms. Here are the most widespread types:

• Vertical ad networks. They focus on a specific industry, such as beauty or gaming, and work with publishers and advertisers there.
• Horizontal ad networks do quite the opposite: they cast their nets wide and promise to reach the broadest audience possible.
• Premium ad networks prefer to work with high-profile publishers, so they provide the best inventory to advertisers who want premium ad placements for their campaigns.
• Blind ad networks. Advertisers can buy ad inventory here for little money and in bulk. It may seem like a good deal, but companies should be prepared to pay without knowing where their ads will appear.
• Mobile ad networks work with in-app advertising.
• Video ad networks offer video ad inventory.

Publishers and advertisers can choose from many options available in the market. Some of the most popular are Google Display Network, Propeller Ads, and AdMob (in case they are interested in mobile ads).

Pros and Cons of Ad Networks

Now you understand how ad networks operate, but let’s summarize what they bring to the table.

To sum up, ad networks can take away the headache caused by dealing with SSPs, DSPs, and ad servers. At the same time, you shouldn’t neglect the risks associated with selling and buying ad inventory with their help.

Programmatic Bliss: What Is an Ad Exchange?

Welcome to the second part of our quest called “ad network vs ad exchange”!

Unlike ad networks, which do a lot of work for you, ad exchanges require active participation from advertisers and publishers.

They are open marketplaces where both parties can find each other and make a deal.

The key features here are process automation and high speed. The obvious metaphor for an ad exchange is a highly digitalized modern stock exchange.

Ad exchanges rely on programmatic advertising technology, meaning deals are made through open auctions based on real-time bidding. Here are the main steps of this process:

Step #1. A potential customer visits a publisher’s website, and this action leads to sending an ad request to the ad exchange.

Step #2. An ad exchange starts an open auction.

Step #3. Advertisers bid on ad inventory.

Step #4. The highest bid wins, and the winner gets to show their ad to the customer.

The whole process is automated and takes milliseconds. However, this doesn’t mean that publishers and advertisers can just kick back and relax. On the contrary, they must understand how programmatic technology works and manage their ad inventory and campaigns through SSPs or DSPs, respectively.

Moreover, setting up their platforms once is not enough; it’s a dynamic process that requires knowledge and skills. On the bright side, if they put time and effort into it, advertisers can launch high-performing campaigns, and publishers can drastically increase their revenues.

As with ad networks, the market offers many options, and the most popular include Google Ad Exchange (which became a part of Google Ad Manager), OpenX, AppNexus, and Rubicon Project.

Benefits and Challenges of Ad Exchanges

Before solving the ad network vs ad exchange dilemma, it’s crucial to hear out to both sides. We’ve already outlined the pros and cons of ad networks, so let’s discuss the upsides and downsides of ad exchanges. First, the positives.

As you can see, the benefits and risks of ad exchanges are pretty balanced. But you can’t decide whether to go for an ad network or an ad exchange by just reading about their pros and cons. That’s why our next stop is comparing two options.

Ad Network vs Ad Exchange: Let’s Compare

The primary difference between an ad network and an ad exchange is control. Ad networks offer you intermediary services, but instead, you should give up a big part of control over ad inventory (for publishers) or managing ad campaigns (for advertisers). However, there are other important distinctions.

Pricing

Ad networks usually use fixed pricing models (like CPM or CPC). Their strength is predictable outcomes, but they aren’t always cost-effective. For example, advertisers can overpay and still not reach their campaign’s performance goals.

At the same time, ad exchanges use real-time bidding, which makes their pricing model more transparent and accurate to the market value of the inventory.

Targeting

Ad networks are better suited for broad campaigns where you don’t need granular targeting. Their options often include only customers’ location, demographics, and interests. Ad exchanges offer advanced targeting options, including browsing history and context-related data. It makes ad exchanges a better choice for personalized campaigns.

Inventory

Usually, ad exchanges offer a more extensive selection of ad inventory and more options for premium placements. At the same time, advertisers must watch out for brand safety. Choosing the websites or apps that won’t harm your brand reputation is your responsibility.

Transparency

With ad networks, you shouldn’t expect much transparency. Quite often, advertisers don’t even know where their ads will appear. Also, ad networks won’t explain the price you’re paying. Ad exchanges, on the contrary, provide advertisers with detailed information about prices and placements.

In a nutshell, an ad network will be a better option if you’re new to programmatic advertising or want to run a broad campaign (for instance, to increase brand awareness). An ad exchange helps launch and manage personalized campaigns with advanced targeting options – but you need to understand how it works.

Finally, before deciding on ad network vs ad exchange, we recommend asking yourself several questions:

• How much control would you like to have over your inventory or campaigns?
• How profound is your technical expertise?
• How much transparency do you need?
• How much time do you have before getting started?
• What are your monetization/performance goals?

Being honest about your goals and priorities is crucial for making the right choice. If you’ve already made the decision, before saying goodbye, we’ll give you some tips on implementing it.

Best Practices and Tips

Solving the problem of ad network vs ad exchange is just the first step in your advertising journey. To make it successful, you must carefully choose your advertising partner. Your business may be well-suited to using ad networks, but if you find an unreliable platform, you won’t benefit. The same applies to ad exchanges: you must do your homework before using any of them.

Also, here’s the checklist of essential things to keep in mind when working with ad networks:

• Consider your industry and audience when choosing an ad network.
• Set performance goals before starting the partnership.
• Analyze performance reports regularly.
• Monitor brand safety on a regular basis.

For those working with ad exchanges, the checklist is different:

• Maintain your knowledge of programmatic advertising properly, and keep learning new ways to optimize your performance.
• Choose the best DPS for your implementing goals.
• Start small, choose one audience segment, and work from there.
• Learn about fraud prevention measures and implement them.
• Use advanced targeting options.
• Adjust your bidding strategies regularly.

There are no right or wrong answers to the ad network vs ad exchange dilemma. There’s just the answer that’s right for you, and if you find it, you can achieve excellent results in any scenario.

Conclusion

Throughout our journey, you’ve learned a lot about the ad network vs ad exchange choice and, most likely, have already made up your mind. We’re sure that you’ve taken into consideration the size of your budget, the level of your technical expertise, your performance goals, and the need for control and transparency.

However, before setting off to free sailing, remember that choosing the right platform isn’t everything. You should make the most of it, which means constantly learning and trying new features.

And if you ever need a reliable DSP in your journey, don’t forget about Epom White-label DSP, which can connect you to multiple ad exchanges and provides advanced targeting and campaign optimization tools. And the cherry on the top is a 14-day free trial!

FAQ

• What is an ad network?

  An ad network is an intermediary for buying and selling digital advertisements. It makes transactions more straightforward and convenient for publishers and advertisers who don’t want to get too deep into the technical details of the process.

• What are the benefits and risks of ad networks?

  Buyers and sellers can perform transactions via one platform instead of learning complicated digital advertising mechanics. With ad networks, advertisers can reach vast audiences across multiple platforms, which is handy for increasing brand awareness or scaling campaigns. At the same time, ad networks often utilize pricing models like CPM (cost per mille) or CPC (cost per click). These models don’t always reflect the actual value of ad inventory. Also, some ad networks may not be too transparent when charging additional fees for their services.

• What is an ad exchange?

  Ad exchanges are open marketplaces where parties can find each other and make deals. The key features here are process automation and high speed. Ad exchanges rely on programmatic advertising technology, meaning deals are made through open auctions based on real-time bidding.

• What are the strong and weak sides of ad exchanges?

  Ad exchanges use the real-time bidding model, so advertisers pay precisely the value of ad inventory at the moment. Thus, the risk of overpaying is minimal. Ad exchanges also help advertisers reach almost any audience. They can set up targeting rules via their DSPs and adjust them while running the campaign.

  On the downside, using ad exchanges is difficult for novices in programmatic advertising. Also, ad exchanges don’t guarantee you winning in auctions. If you can’t afford to pay a lot for premium inventory, competitors will outrun you.

• How do I choose ad network vs ad exchange?

  An ad network is a better option if you’re new to programmatic advertising or want to run a broad campaign (for instance, to increase brand awareness). An ad exchange helps launch and manage personalized campaigns with advanced targeting options, but you must understand how it works.