Performance Marketing vs Brand Marketing: What’s the Difference?
by Isabel Greenfield
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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, who uses them, and the various types of exchanges.
What is an ad exchange and how does it work? An ad exchange is the central part of the purchase process for programmatic advertising. An ad exchange acts as a marketplace that sits in between publishers looking to sell their inventory and advertisers looking to buy it.
Publishers use another piece of advertising technology called a supply-side platform (SSP) to share the inventory they have available and the minimum price at which they would be willing to sell their inventory. The SSP essentially plugs into an advertising exchange or more often, multiple ad exchanges so that their inventory can be easily accessed.
To access this inventory, advertisers use a demand-side platform (DSP) to input their campaign needs from targeting parameters to bid price. The DSP also plugs into the ad exchange, like a focused shopper at a market, looking only for the products that fit exactly what they are looking for.
Most ad exchanges sell inventory through real-time bidding, which means that an ad impression is bid on by multiple advertisers, with the spot going to the highest bidder. While this happens in real-time, it feels instantaneous to the viewer.
Programmatic ad exchanges allow publishers to make their inventory available to anyone who is looking for them and allow advertisers to buy from a range of publishers. They eliminate the need for direct deals which can be laborious and rely on human negotiation which is time-consuming and imprecise.
So who exactly buys from advertising exchanges? An ad exchange is meant to make advertising available to anyone who is looking to advertise. Most commonly, advertisers will buy directly from an ad exchange or an agency will buy from the exchange on behalf of their clients. While less common, an ad network may also buy directly from an ad exchange.
Don’t worry, we’re not just throwing another term–ad network–into the mix without defining the differences. The difference between the two may most simply be thought of as a marketplace (ad exchange) versus a curated shop (ad network).
In a marketplace, anyone with something to sell can set up a table and make a sale. In a store, however, the owner has specific specifications as to what they are looking for and they control what type of products they are selling within the store. It’s much the same with ad exchanges and ad networks.
Unlike an ad exchange, an ad network buys impressions in bulk and then makes them available for purchase by the advertiser. They will sort through the impressions rather than requiring an advertiser to do the sifting, offering curation, but within a private setting. They become an additional player within the purchasing process, often marking up inventory prices before reselling to advertisers. Thus the appeal of an ad exchange is that it offers transparency, without another third-party benefiting from inserting themselves into the process.
Now that you know what an ad exchange is conceptually, what about some real-life examples?
Some popular ad exchanges are:
There are various types of ad exchanges including –
This is a great question because the naming here doesn’t make this one easy. There are two different Google entities you may be hearing about: Google Ads and Google Ad Exchange.
Google Ads is a paid search platform–not an ad exchange.
This service sells paid ads at the top of search results or within the Google Maps function. Advertisers can buy keywords that are relevant to their business and these ads appear when a user searches for those terms. Google Ad Exchange, which is often referred to as Google AdX, is an ad exchange and one of the most popular.
Programmatic ad exchanges make their money in a few ways. First, they often require a setup fee to be paid at the outset of using the exchange. Then, perhaps the most common way an ad exchange makes money is off a commission. A publisher pays a percentage of the money that they make from an advertiser back to the ad exchange since the exchange was what helped make the connection and ultimately the sale. The cost doesn’t always fall to the publisher. Advertisers may be the ones responsible for the commission, depending on the ad exchange and the negotiated deal.
How does Performance TV compare to an ad exchange? Well, Performance TV, a form of OTT advertising, plays a different role in the ad ecosystem, and actually works with ad exchanges along the programmatic process. That said, unlike an ad exchange, Connected TV platforms like MNTN offer both quality impressions and transparent reporting.
An ad exchange is a connection between the publisher looking to sell impressions and an advertiser looking to buy impressions. While advertising exchanges were originally 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.
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