Advertising Exchange

The online advertising marketing place is multi-tiered. On the one hand you have the publisher who directly solicits clients for advertising inventory. At the next level you have the network. The network ‘recruits’ publishers and sells their advertising inventory to their (network’s ) clients. At the next level you have the advertising exchange.

An ad exchange is like a stock market. It is a mechanism that allows buying/selling of ad impressions openly, transparently. The ideal ad exchange would manage risk and maximize return on every impression purchased. Research conducted by different agencies indicate that a fairly large number of advertising professionals – over 50% - who have not yet ‘adopted’ the ad exchange plan to do so soon.

Benefits of the ad exchange

A buyer’s target has always been to find an efficient way to be able to buy advertising inventory. Upwards of 20% of ad inventory remains unsold. In this context, an ad exchange benefits different players in different ways –

The seller can reduce unsold inventory thereby increasing overall yield. Given the amount of unsold inventory, the ad exchange is a very good mechanism for the publishers to monetize unsold, remnant inventory.

The buyer can ensure better ROIs and achieve better reach for their campaigns – the ad exchange’s dynamic bidding rules enables the buyer get inventory at the best possible price

Disadvantages of the ad exchange

An ad exchange is not the panacea for all ills – it has its own flaws.

Firstly, different ad agencies offering different models like Real time auction and prepay. Neither model has an established superiority over the other. In fact, it is not very clear which model works best for the publisher.