An Ad Exchange is a digital marketplace where publishers and advertisers enter into real-time bidding to buy and sell ad space and impressions. An Ad Exchange connects to the supply-side platform (SSP) on the seller side and demand-side platforms (DSP) on the buyer side, along with multiple ad networks.
Ad exchanges support all types of ad inventory, including display, audio, video, interactive, in-app, and in-game across mobile and desktop platforms. Many ad exchanges function programmatically, allowing companies to automate their advertising buys.
The publisher sets the floor price. Advertisers can utilize the audience data to determine whether the ad space on offer is relevant to their campaign. They can purchase the space in real-time and bid on it instantly. The advertiser with the highest bid will acquire the ad space to display their ads. These decisions can be manual or automatic by algorithms that can scan the demographics and analyze user data to find the best value for an advertiser to bid. Ad exchanges are very similar to the trading floor of a stock market.
There are two types of Ad Exchanges:
Open Exchanges: Open Ad exchanges are available to all advertisers and publishers, including ad networks.
Private Marketplaces: Private Ad exchanges or Private Marketplace is available only to premium buyers and sellers who bid on advertising space through a private auction.