Ad Exchanges

William Chen

What are Ad Exchanges?

An ad exchange is a digital marketplace that enables advertisers and publishers to buy and sell advertising space, often through real-time auctions. They’re most often used to sell display, video and mobile ad inventory.

They can be seen as a big marketplace where buyers and sellers can interact in millions of split-second real-time auctions.

What’s the Difference between Ad Exchanges and SSPs?

Publishers use supply-side platforms (SSPs), in part,  to make inventory available for programmatic buying, and multiple publishers can plug into an SSP. Multiple sellers on one platform — sounds like an ad exchange, right? The lines between the two are blurring as the technology has advanced and SSPs have attracted a critical mass of publishers.

In addition to facilitating ad transactions, however, SSPs are designed to connect to multiple ad exchanges, ad networks or any combination of open exchanges and private marketplaces and offer tools designed specifically for publishers to optimize their sales efforts and improve fill rates (sell more ads) at the highest CPMs.

More and more companies operate what are essentially ad exchange-SSP hybrids. And going a step further, there are now a growing number of companies that offer a “full stack” of ad tech with products including for sellers to auction impressions and buyers to bid on those impressions. Rubicon Project, DoubleClick and ONE by AOL are among the examples of companies that offer products for both parties.

Open Marketplaces vs Private Marketplaces (PMPs)

They are exactly as they sound. In an open marketplace environment, anyone is eligible to buy the publisher’s inventory that they have posted in the open exchange. This inventory would be sold in a real world RTB environment with fewer restrictions than PMPs.

In a private marketplace environment publishers make select inventory, usually of higher quality, available to a select pool of buyers. This inventory is generally more expensive due to the high quality nature. PMP inventory may be above the fold (ATF), have higher viewability, or have higher CTRs. Publishers can also set price floors for this inventory to ensure this premium inventory does not get sold for too low of an amount.

Types of PMPs

  • Preferred Deal. One buyer buys an inventory package from one publisher at a fixed price, ahead of the open Exchange. Bidding is optional.
  • Private Auction. Multiple invitation-only buyers bid on an inventory package, subject to a specified deal floor price, ahead of the open exchange.
  • Programmatic Guaranteed. A buyer buys an inventory package from one publisher at a fixed price, ahead of the open Exchange. Bidding is mandatory.

Notable Ad Exchanges

  • DoubleClick Ad Exchange (Google Ad Manager)
    • Minimum Traffic Eligibility: 20 million page views per month (Google may directly contact you)
    • CPM Rates: 30 cents for worldwide traffic, USD 1 and above for tier 1 traffic
  • OpenX
    • Minimum Traffic Eligibility: 10 million page views per month
    • CPM Rates: 20 cents for worldwide traffic, USD 1 and above for tier 1 traffic
  • AppNexus
    • Minimum Traffic Eligibility: 10 million page views per month
    • CPM Rates: USD 1.5 and above for tier 1 traffic
  • One by AOL
    • Minimum Traffic Eligibility: 3 million page views per month
    • CPM Rates: USD 1 and above for tier 1 traffic
  • Smaato
    • Minimum Traffic Eligibility: No minimum monthly page views limit
    • CPM Rates: 20 cents for worldwide traffic
  • Rubicon Project
    • Minimum Traffic Eligibility: Estimated 5 million page views per month
    • CPM Rates: USD 1 and above.
  • Mopub
    • Minimum Traffic Eligibility: No minimum monthly page views limit
    • CPM Rates: 15 cents and above for worldwide traffic for in-app banner ads. Expect good fill rates.
  • Pubmatic
  • Kargo
  • Sovrn

Sources

The price of anything is the amount of life you exchange for it.
— Henry David Thoreau

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Published by William Chen