Ad Network vs Ad Exchange: What’s the Difference?

by The MNTN Team

7 Min Read

Today, over 90% of digital display advertising content is purchased programmatically, signifying the evolution of the ways through which marketers buy ad space.

Ad networks and ad exchanges are at the heart of the shift, providing places for ad buyers and sellers alike to connect, make deals, and deliver content to consumers. Nevertheless, it’s important to understand what sets the two apart, as well.

In the following ad exchange vs. ad network head-to-head, you’ll discover the pros and cons of each option so you can decide which marketplace is the right fit for your business.

What Is an Ad Network?

An ad network is a platform that connects advertisers with websites, Connected TV (CTV) streaming channels, and other publishers that want to host marketing content.

By aggregating ad space from various publishers, ad networks provide you with a streamlined way to purchase inventory, ensuring your content reaches a broad audience across multiple sites.

You can think of an ad network as a sort of middleman that simplifies an otherwise complex purchasing process. Without an ad network, you’d have to purchase slots directly from each publisher, a process that would undoubtedly be tedious and time-consuming.

How Do Ad Networks Work?

Ad networks function by collecting slots from numerous publishers and selling them to marketers. They start by aggregating available ad space from various sites and streaming channels, then categorizing the inventory based on factors like demographics, content type, and audience behavior.

Once you submit your creatives and specify your target audience, the network will match you with relevant content. And after you make a purchase, your ads will be displayed on the selected websites.

Many networks also include reporting tools to help you determine which aspects of your campaign worked, which didn’t, and how you can get better in the future.

Advantages of Ad Networks

Using an ad network offers several benefits over sourcing slots independently. Some of the most notable advantages include the following:

Expanded Reach: Ad inventory is consolidated from a plethora of publishers, giving you access to a wider audience.
Precise Targeting: Sophisticated targeting options allow you to direct your ads to specific demographics, geographic locations, interests, and behaviors.
Enhanced Cost Efficiency: Bulk purchasing can secure lower rates.
Saves Time: Simplify the process of managing relationships with publishers.
Comprehensive Insights: Detailed analytics and reporting offer details on how your ads are performing.

Despite these benefits, there are some potential drawbacks to using an ad network.

Disadvantages of Ad Networks

There are also several potential drawbacks of using an ad network:

Lowered Transparency: Detailed information about where your ads are being placed may not always be provided.
Limited Control: You may have less control over where and when your ads appear.
Quality Variation: The quality of your placements can vary.
Potential for Fraud: Your ads may be shown to bots (making for fake impressions), decreasing your return on investment (ROI).

To combat these, it’s best to use a reputable ad network to mitigate these concerns and protect your brand from unscrupulous publishers.

What Is an Ad Exchange?

An ad exchange is a digital marketplace where advertisers and publishers buy and sell slots through an auction-based real-time bidding (RTB) system.

Unlike ad networks, which act as intermediaries, ad exchanges facilitate direct transactions between buyers and sellers, offering more transparency and flexibility.

How Do Ad Exchanges Work?

Ad exchanges operate through a real-time bidding process. Every time a user visits a site or streams content, the platform will run an auction for available ad space. Advertisers will place bids for the space based on the user’s profile and the ad slot’s perceived value.

The highest bid wins the auction and gets the impression. The content will be displayed to the user immediately. The entire auction process happens in a fraction of a second using automated algorithms and programmatic advertising processes.

After an ad is displayed, the exchange will track its performance and relay the information to you in real time.

Advantages of Ad Exchanges

An ad exchange offers various benefits, such as:

Transparency: Provides detailed information about where your ads are placed and how much you pay for each impression.
Real-Time Bidding: The auction-based system allows for more efficient and flexible ad-buying.
Greater Control: You’ll enjoy more control over your campaigns, including the ability to target niche audiences.
Elimination of Middlemen: You’ll be able to deal directly with sellers, leading to better pricing and fewer fees.

Ultimately, many businesses prefer exchanges for their transparency and the opportunity to purchase directly from sellers.

Disadvantages of Ad Exchanges

Of course, there are also some downsides to using an exchange. These include:

Complexity: The real-time bidding process can be complex, and it requires a good understanding of market dynamics to succeed.
Resource Intensive: Managing your campaigns can be tedious compared to doing so with an ad network.
Potential for Fraud: Ad exchanges are not immune to fraud.
Variable Costs: Prices can fluctuate significantly due to the auction-based nature of exchanges.

Fortunately, platforms like MNTN Performance TV offset these concerns by using programmatic ad purchasing on premium CTV inventory to ensure only quality providers can participate in the exchange.

Summary of Key Differences

Here’s a quick rundown of an ad network vs. ad exchange. Use these details to help decide which of the two is best for your business.

Inventory Access and Management

Ad networks aggregate and package ad space from multiple publishers manually, providing broad access to advertising slots. However, you won’t always know exactly what you’re buying or where your content will be displayed.

By offering direct access to inventory through real-time bidding, ad exchanges provide a much better view of what you’re buying. The inventory is well-organized, allowing you to filter results based on channels, demographics, and other variables.

Transparency and Control

Ad networks provide less transparency and control over when and where your content appears. If your assets appear on questionable channels or content, it could damage your brand reputation.

Ad exchanges, on the other hand, offer much better clarity and authority. You can see where your ads will be placed and how much you are paying for each impression.

Pricing Models

Lastly, ad networks typically use fixed pricing models, which can save money. However, you won’t enjoy much flexibility regarding ad spend.

Ad exchanges, in contrast, use dynamic pricing through real-time bidding, which provides much greater flexibility, though there is also a risk of price volatility.

Why Every Business Needs MNTN Performance TV

MNTN Performance TV realizes the value of both ad exchanges and ad networks. However, we also believe in doing things differently, which is why our CTV platform functions as its own exchange. Unlike some others, MNTN uses programmatic algorithms to handle all ad purchases, ensuring that you get the most bang for your buck.

As a MNTN Performance TV client, you’ll benefit from our powerful integrations, robust reporting toolkit, and Creative-as-a-Subscription™ (CaaS), a unique offering designed to give you a steady stream of high-quality video advertising assets.

Additionally, you’ll receive access to all premium CTV networks, allowing you to advertise when and where you want. And thanks to our direct deals with premium streaming networks, you can run your streaming ads on top-tier programming while also benefiting from our preferred pricing.

The result is a stronger ROAS and enhanced access to deals that you would otherwise have to strike yourself.

Ad Network vs. Ad Exchange: Final Thoughts

The ad exchange vs. ad network debate comes down to three key factors: simplicity, reach, and transparency. While ad networks are easier to use, they fall short in transparency and control, which can be a big concern for your brand. On the other hand, ad exchanges keep you in the driver’s seat of your campaign.

If you want to experience the power of programmatic advertising without the risk, partner with a premium provider like MNTN Performance TV.