An ad exchange is an online platform that connects buyers and sellers to buy and sell advertising inventory from multiple sources through a real-time bidding process. Ad exchanges bring together the demand (ad agencies, advertisers, and demand-side platforms (DSPs)) and the supply (ad networks, publishers, and supply-side platforms (SSPs)) to facilitate the buying and selling of ad inventory.
Ad exchanges work through a real-time bidding (RTB) process. When a user uses an app integrated with the ad exchange, a request for an ad is sent to the ad exchange. The ad exchange then sends this request to multiple advertisers, who bid on the opportunity to display their ad to the user in real time. The highest bidder wins the auction, and their ad is displayed on the app or website. The process of auctioning and displaying the ad happens within milliseconds.
Ad exchanges use algorithms and data from both the advertiser and the publisher to determine the most relevant and valuable ad to show to the user. The information used includes user data, such as demographics and browsing history, as well as data about the app or website, such as page content and geographic location.
Once the ad is displayed, the advertiser is charged based on the cost of the winning bid. The ad exchange acts as an intermediary between the advertiser and publisher, handling the payment and ensuring that both parties receive their fair share of the revenue.
Ad exchanges typically use a real-time bidding (RTB) process, which allows advertisers to see exactly how their bids compare to other advertisers and what they need to bid to win a particular impression. High transparency helps advertisers understand the competitive landscape and make informed decisions on planning their advertising budget for the best results.
Ad exchanges streamline the buying and selling process, allowing faster and more efficient transactions. By automating the process, ad exchanges reduce the time and effort required to negotiate and execute advertising deals, freeing up valuable time and resources for both buyers and sellers.
Ad exchanges provide access to a vast network of mobile devices, platforms, and publishers, giving advertisers access to a much larger pool of potential customers. This benefit allows advertisers to expand their audience and reach new customers, helping to grow their business.