What is an Ad Exchange?
An ad exchange is a real-time online marketplace where advertisers and publishers can buy and sell advertising space and impressions. The majority of ads sold on exchanges include display, video, and native across both mobile and desktop platforms. Most ad exchanges function programmatically (or automatically), allowing companies to automate much of their advertising buys. Exchanges let ad networks and others directly purchase ad impressions, which occur whenever a user reaches a page on a website or app that is marked as ad space.
Advertisers can connect to exchanges using demand side platforms (DSP) and utilize audience data to determine whether the space on offer is relevant for their campaign. They can then purchase the space in real-time and bid on it instantly. These decisions can be made manually, or in many cases, automatically by algorithms that scan demographic and user data to find the best value for advertiser spend.
There are two major types of exchanges: open exchanges or private marketplaces. The former allows any agency or advertiser to connect to the platform and bid on ad space and impressions. Private marketplaces still function via auction, but their client lists are restricted to referrals or invitation.