Glossary | A | Ad Exchange

What is an Ad Exchange?

Ad exchanges allow developers a place to make ad inventory available to potential buyers — existing as an intermediary between the supply side and the demand side of the ad buying process. Ad exchanges plug into supply-side platforms (SSPs) and demand-side platforms (DSPs) so that a wide variety of developers and marketers have access to and can exchange ads and inventory. Both DSPs and SSPs can plug into ad exchanges, making the landscape much vaster and ultimately creating that many more opportunities for both developers and advertisers to monetize. Ad exchanges also combat bias in the buying process by using regulations that make the whole exchange more transparent. For example, in ad exchanges, developers can post the minimum price they will accept for an impression (called the “floor price”) in a real-time bidding (RTB) auction. Similarly, advertisers can set the highest price they will pay for the same impression. This allows for automatic and instantaneous ad exchanges, creating the optimal scenario for both advertisers and developers in any given transaction. As programmatic gains prevalence, the lines between some of these entities are blurring. The fact remains that both SSPs and ad exchanges post ad inventory for sale. Also, some platforms provide more than one of these services at once, so there are some redundancies in the ad tech world. Moving forward, we can expect these different platforms to shift and blend, allowing for the most efficient and streamlined programmatic ad buying process possible.