Ad Agency vs Ad Network vs Ad Exchange: Who's Your Best Partner in the Advertising Business?

A fixer is a person/team who makes arrangements, solves problems, and acts as a middleman for other people. Even in ad tech, from time to time, everybody needs their Pulp Fiction’s Mr Wolf on a silver NSX.

The problem is – who can you trust in this advertising house of cards? Is it your ad agency, an ad network, or your own wits and strength on an ad exchange? What even are those, and how are they different?

Today, we’ll discuss your advertising/marketing fixers; we’ll differentiate them, see their main uses, and decide which one should cover your back.

What Is an Ad Agency?

An ad agency is an independent business that creates, plans, and manages advertising and marketing activities for its clients.

In simple terms, if you want to buy/repair/service a car without hassles, you go to an auto agency. If you want to manage your marketing and advertising campaigns without hassles, you go to an ad agency.

What Was the First Ad Agency?

As you might’ve guessed, the advertising agency is hardly a new term. The early ad agencies started functioning long before the Internet was even a concept. For example, the first acknowledged ad agency in the UK, White Bull Holmes, was created in 1800, while its US counterpart started working in 1869.

So yes, before becoming relevant to what we’re talking about here, ad agencies managed radio, TV, and newspaper ad placements.

What Are the Different Types of Ad Agencies?

Such a long existence created diversity in how these businesses operated. What do we mean by that? Every advertising agency exists in its own micro-universe. Each of them has their own set of tasks that they are responsible for; some are experts in direct marketing tasks, and others wholeheartedly develop marketing strategies.

Since the line is that blurry, it’s really difficult to characterize what an ad agency is. Nevertheless, it’s possible to (somewhat) differentiate ad agencies per these groups:

Ad agency

In its traditional sense, an ad agency is responsible for both creating and distributing the ad placement. The range of tasks usually comes down to advertising and direct marketing.

An ad agency doesn’t develop and manage your marketing strategy. They don’t create things like branding or logo. Instead, they use their creative and media planning skills to deliver your message to targeted prospects as well as possible.

Marketing agency

On the contrary, a marketing agency (firm, company) is responsible for most of the marketing tasks. They develop your unique selling point, draw you a logo, decide who your audience is, and think of the best name for your product.

Media buying agency

A media buying agency is a complex yet very specific job. They are the masters of advertising, meaning that they only distribute your ad placement.

A media buying agency acts as a traditional advertiser; they manage communications with the publisher and strategize on optimizing your ad campaign.

What all of these have in common is that they are bound by law and common sense to work as an advertiser’s right hand. The terms of your (advertiser’s) and theirs (ad agency’s) partnership are declared and documented. So, if you don’t like something about how they operate your funds – you have the right to ask: “What the hell?”

Things are different, to say the least, with an ad network…

What Is an Ad Network?

An online advertising network is a business that matches the publisher’s inventory and advertiser’s demand.

Think of an ad network as a middleman between advertisers and publishers. Like, if you want to buy shoes from a limited collection, the reseller is someone who has already bought them and will sell them to you for a small mark-up.

How Does an Ad Network Work?

Didn’t get it? A one-man show would explain it in a perfect way:

The key point is:
Ad networks are their own separate business whose main priority is to profit from the traffic resell.

What Types of Ad Networks Are There?

We know you’re itching to see the clash of ad agency vs. ad network vs. ad exchange already but bear with us. It’s important to understand the essence of each before deciding who’s the best.

And it would be logical to continue with explaining the types of ad networks. Just like with the agencies, there are a LOT of them. The first division comes by the type of inventory it offers:

• Horizontal ad network

Horizontal ad networks deliver ads to an extremely broad audience. They are the best pick for advertisers who seek scalability and wide reach.

• Vertical ad network

On the contrary, a vertical ad network connects advertisers in a specific niche with a net of relevant publishers.

• Premium ad network

Premium inventory – premium ad placements, these ad networks are on the VIP side of the industry.

• Specialized ad network

Just like their vertical-specific colleagues, these ad networks work only with a certain type of traffic, audience, or niche.

The second division comes from how an ad network operates. Once again, it’s a big mess, so don’t bother remembering each of these. Just be aware of their existence and do keep in mind these names.

• Rep Firms

Rep firms, short for site representation firms, are outsourced advertising sales forces. Their main focus is high-traffic, well-branded sites. Think of these as media buying agencies, but more independent from you.

• Ad arbitrage

An ad arbitrage is an individual ad network in its most classical meaning. Acting like a Wall Street broker, an ad network buys ad inventory in bulk and sells it for more than they paid. It’s a risky business, that’s why these guys set higher markups.

• Ad aggregator or ad mediator

An ad network aggregator is a range of ad networks. Those are basically the same as arbitrages, but bigger. The benefits are consequential. The advertiser gets a wider range of available placements but gets little to no transparency in how his funds are spent.

Ad Network vs Ad Agency Differences

“You and I are not so different” – if we were in a superhero movie, the ad network would probably narrate this absolute classic to an ad agency.

But an ad agency and ad network are, surprise-surprise, quite different.

Difference # 1. An ad network is about advertising
An ad network has no relation to marketing activities. Yes, neither do media buying agencies, but they view advertising as a part of a marketing strategy. Ad networks don’t really care about that.

Difference # 2. An ad network works with both advertisers & publishers
An ad agency only does business with the advertiser. The ad network is there both for the publisher and the advertiser.

Difference # 3. An ad network is more independent than an ad agency
An ad agency is bound to serve an advertiser. An ad agency is defined by how satisfied the marketer is in the end. An ad network, on the contrary, focuses on its own profit, which depends on who and how it works with.

Side note: That doesn’t restrict ad agencies from working with ad networks. In fact, many do.

Your attitude towards ad networks is mostly a matter of how you view middlemen in general. Some might argue that ad networks take too high of a markup for the provided services, especially in the age of affordable ad tech.

However, if you’re a beginner in the ad game or simply don’t care about advertising processes, it’s a reasonable option.

Now comes the tool for those who do care about advertising and have enough power to manage it by themselves.

What Is an Ad Exchange?

An ad exchange is a digital marketplace in programmatic advertising auctions. It is a platform where the publisher’s supply-side platform sells ad placements to the advertiser’s demand-side platform.

It’s quite easy to comprehend, actually. Amazon, AliExpress, and Shopify are all digital marketplaces where interested buyers purchase goods from shops that sell them. An ad exchange is just that for ads.

How does an ad exchange work? Well, you have to understand that the ad exchange is a programmatic technology.

You NEED a demand-side platform as an advertiser, and you NEED a supply-side platform as a publisher if you want to buy/sell independently. If you partner with an ad network, they’ll use ad tech as well. The publisher offers their ad inventory via SSP, and the list of interested advertisers compete for it by bidding, the highest bid wins, and the advertiser gets the ad placement.

What Are the Different Types of Ad Exchanges?

The question is not really accurate, but we’re keeping a comprehensive naming here. What you should ask is: what types of deals can I make with an ad exchange?

Open programmatic auction

An open programmatic auction is the most commonly used system to buy and sell ad placements programmatically. We’ve explained this one a gazillion times, but let’s do it once more.

Advertisers place their bids on a specific audience simultaneously, and the highest bidder among them wins the impression. The whole action works with the help of RTB (real-time bidding) protocols and takes less than 100 milliseconds.

Anyone can enter, unlike the PMP and direct deals.

Private marketplace

A PMP is a VIP brother of an open programmatic auction. Only a selected few can bid on the specific inventory. They get an “invite” beforehand. The rest works about the same.

Direct deal

A direct deal is an undeclared son of programmatic and direct media buying. In essence, it’s the latter: the advertiser and publisher “directly discuss” where and how the selected ad placement goes and how much it costs.

But instead of using an ad server (technology made specifically for that), they use programmatic ad tech: DSPs, SSPs, and ad exchanges. The logic is understandable: if you don’t do direct buying very often, you won’t invest in ad servers and just try to utilize the tools at hand.

Ad Network vs Ad Exchange Differences

Now for the final clash. The divergences should be clear by now, but let’s round it up a bit.

Difference # 1. The ad exchange is a technology first, a business second
This means that anybody above can use it, starting from independent advertisers with DSPs and ending with ad networks and ad agencies.

Not much need to say, but the transparency is way higher than in the case of an ad network.

Difference # 2. Buying with an ad network is more stable but more limited

Unlike ad networks, each having a specific kind of traffic that they aggregate, an ad exchange will let you buy/sell whatever you want; just put the parameters right. However, you almost never know if you’ll win the bid in ad exchange since, in most cases, it’s an open programmatic auction.

We can go on and try to make a bubble of differences by comparing a literal reselling business to a technology, but let’s make it easier.

So, in two sentences:

Buying/selling with ad exchanges requires investment in technology and understanding of the process, but rewards you with better pricing and transparency. Buying/selling with an ad network doesn’t require much for you, but you lose potential profits on reselling markups.

Ad Agency vs Ad Network vs Ad Exchange: What Is Best for You?

To be completely honest with you, this summarizing part of the text had to contain a chart, but with how varied ad agencies, ad networks, and ad exchanges are, it’s simply impossible to generalize them in a nice simple table.

That’s why we’ll answer the initial question: “Which one should you trust?”

1. Use an ad agency if you’re an advertiser who is interested in both advertising and marketing but wants a specialist who can keep them covered.
   An ad agency’s main interest is to satisfy your needs, so yes, you can trust them (depending on the specific agency ofc).
2. Use an ad network if you are a beginner advertiser/publisher or simply don’t care about advertising processes and just desire profits from your activities.
   An ad network’s main focus is their own profits; they owe you little. But they do their job, and they do it just fine. In this case, trust is a matter of your own moral compass.
3. An ad exchange is an option for an advertiser/publisher confident in their own forces. If you have an advertising strategy, an ad tech to cover your needs, and general understanding of the process – you’ll get the most profit out of all of these (marketing not included).

In the case of an ad exchange, trust is about your strategy and tools. You can rely on us with the latter!

Epom White-label DSP is about leading ad campaigns as efficiently as possible. We are connected to 30+ SSPs and ad exchanges while giving you the option to maintain the platform as if it’s your own.