MVPD (Multichannel Video Programming Distributor)
by The MNTN Team
7 Min Read
MNTN is the Hardest Working Software in Television. Get started today. Be on TV tomorrow.Learn More
8 Min Read
The tech world, specifically the ad tech world, can feel like an excess of new words and tools that seem to pop up overnight. As you begin to explore the various terms of programmatic advertising, an ad exchange is something you’ll see mentioned often as an important part of the programmatic ad buying and selling process.
Keep reading to learn more about what is an ad exchange, how they work, who uses them, and the various types of exchanges.
An ad exchange is a digital marketplace that facilitates the buying and selling of advertising space in real-time through automated auctions. In other words, it acts as a marketplace that sits in between publishers looking to sell their inventory and advertisers looking to buy it.
An ad network bundles inventory from multiple publishers and sells it to advertisers, often with limited transparency and predefined pricing. In contrast, ad exchanges enable real-time bidding, giving advertisers more control over pricing and placement.
Ad exchanges provide a more efficient and transparent way for advertisers and publishers to buy and sell ad inventory. Here are the key advantages:
Ad exchanges enable advertisers to bid on impressions the moment they become available, ensuring ads reach the most relevant audience instantly. This dynamic process maximizes efficiency and drives better campaign performance.
Unlike traditional ad buying, ad exchanges give advertisers full visibility into where their ads are placed. This transparency allows for better control, brand safety, and smarter budget allocation.
By leveraging audience data, ad exchanges help match ads with users who are most likely to engage. This precision targeting improves relevance, reduces wasted impressions, and increases conversions.
Advertisers can bid only on impressions that align with their campaign goals, ensuring they don’t overspend on low-value placements. This auction-based approach leads to a more efficient use of ad budgets and higher ROI.
Ad exchanges connect advertisers to a vast range of inventory from multiple publishers, including premium content providers. This broad reach allows brands to scale campaigns and connect with more high-intent consumers.
To recap, an ad exchange is a digital marketplace that streamlines the buying and selling of advertising space, primarily through real-time bidding (RTB) mechanisms. Here’s how it typically works:
This process enables efficient, automated, and transparent transactions between buyers and sellers in the digital advertising ecosystem, optimizing ad placements and pricing through real-time market dynamics.
There are various types of ad exchanges including:
An open ad exchange is perhaps what most refer to when discussing an ad exchange. An open ad exchange is exactly what it sounds like–an ad exchange that is open to anyone to access. Any advertiser, agency, or ad network has access to the inventory on the open exchange.
A private ad exchange is also just what it sounds like–an exchange that can only be accessed by specific advertisers. A publisher may want to limit who can access their inventory (and therefore, what advertisers show up within their content) so rather than post their inventory to an open ad exchange for anyone to access, they use a private ad exchange. A private ad exchange also prevents an ad network from reselling a publisher’s inventory.
A preferred deal is negotiated between a publisher and an advertiser. A fixed price, usually at a premium, is agreed upon so that an advertiser can get a first look at the inventory a publisher has available. If the advertiser does not want the inventory, it then moves to a real-time auction. This is also often called programmatic non-guaranteed because the inventory isn’t reserved for the buyer and they don’t need to buy the inventory once they see it.
Now that you know what an ad exchange is conceptually, what about some real-life examples?
Yes, Google runs an ad exchange known as Google Ad Exchange, which enables publishers and advertisers to buy and sell digital ad inventory in real-time. It streamlines transactions through real-time bidding and data-driven optimization.
No, Facebook does not operate as an ad exchange; instead, it manages its own advertising ecosystem called Meta Audience Network. This platform allows advertisers to reach Facebook’s vast audience but does not facilitate open-market programmatic bidding like a traditional ad exchange.
Some other popular ad exchanges are:
Programmatic ad exchanges make their money in a few ways.
While Performance TV works with ad exchanges, it goes beyond its capabilities by offering premium inventory, transparency, and performance-driven features.
An ad exchange is a connection between the publisher looking to sell impressions and an advertiser looking to buy impressions. While advertising exchanges were created to make it easier and more mutually beneficial to exchange ad impressions, there are safer and more transparent options for CTV/OTT advertisers to explore.
Subscribe to the report Apple, Amazon, NBC and more use to get their CTV news.