There has been much confusion in the advertising industry surrounding ad networks and ad exchanges. The advertising industry has grown so large that marketers need to find more efficient ways to acquire ads. Ad networks and ad exchanges are two forms of programmatic advertising solutions that have been utilised by companies such as PRGRMTK to accomplish this.
Online marketers have a myriad of ads from which to choose one. It is the equivalent of picking out a fish from the ocean. Ad networks allow marketers to pick ads from a large inventory in a fast, easy and cost effective manner. All ad networks are not the same, though. Some networks choose to focus on quantity and reach while others focus on having quality ads available.
Ad exchanges operate in ways similar to a stock exchange. It serves as a platform for marketers to choose ads at a price that is right for them. Ad exchanges attempt to bring more efficiency and predictability in prices for advertisements. However it is not able to function exactly as an exchange due to the fact that demand and supply are not the sole determinant of prices.
Comparing the Two
So how do these two platforms compare? They both have different features that are appropriate for you depending on what you need. Generally ad exchanges offer more variety at lower prices while ad networks offer quality in a controlled environment albeit at higher prices. The two systems should not be seen as rivals, one is not going to put the other out of business. If anything, they have created niche opportunities for players on the market. Data re-targeting exchanges, yield managers, publishers and ad servers all have opportunities in the business.
Ad networks allow publishers to get rid of unsold inventory while ad exchanges remove the middle man from the process. Ad networks do require more time as negotiations over prices need to be held while in ad networks the potential for revenue always remains a challenge. Ad networks offer little transparency while their exchange counterparts offer more transparency.
Ad exchanges often have issues with quality and this has even led some to speculate that the ad inventory is similar to that of “pork bellies.”
Impact of mobile platforms
Ad networks have focused their operations on mobile sites. This has brought in major players like Google and Apple. The entrance of these companies has signalled the birth of a new advertising ecosystem. In this system, things like timeliness, the use of apps and location all bring a new set of dynamics to advertising.
With online marketers able to monitor the habits of their target much more closely, this has given rise to concerns over privacy. This has led to increased government scrutiny and some campaigners have lobbied the government to investigate the activities of online marketers. Activities such as data targeting, the use of personal data and tracking of specific activities are being called into scrutiny. It brings to bear the larger issues concerning privacy rights.