Ad Network vs. Ad Exchange vs. DSP

If you’re new in the world of crypto advertising, the ad network vs. ad exchange debate might sound confusing. And when you add DSPs on top of that, the concept of programmatic advertising becomes quite blurring.

But don’t worry. Things are not as complicated as they sound.

Technological evolution has brought many changes to the online advertising industry. And technologies such as ad networks, ad exchanges, and DSPs (Demand-Side Platforms) are sure to cause some confusion.

The creation of Ad Networks

To better understand all the different platforms available in today’s advertising industry, we first need to see what display advertising is.

DEF. Display advertising is a type of online advertising that can take a variety of shapes and forms, from banner ads to interactive multimedia banners.

These ads are published on various websites for the users to either interact with them (clicks) or to view them (impressions).

Initially, the whole process of displaying ads was simple. There were only 3 parties involved – advertisers, publishers, and users.

Whenever advertisers had a project they wanted to promote, they would approach publishers and pay them in exchange for exposure. The advertisers’ banners would get displayed on the publishers’ websites and thus right in front of users.

But this process turned out to favor large publishers with huge audiences. Since advertisers wanted to display their banners to as many people as possible, most of the publishers were considered too small to do business with.

And that’s where ad networks came in.

It all started in the ’90s when advertising agencies started buying ad inventory from publishers and then reselling it to advertisers. At first, it was uncoordinated and nearly impossible to track. But the situation changed in 1995 when Doubleclick appeared and became the first internet ad-serving platform.

What are Ad Networks

DEF. An ad network represents a network of websites on which advertisers are able to show ads. The network’s algorithm handles the ads according to the advertiser’s budget and targeting criteria.

In the beginning, ad networks partnered with publishers regardless of their size and created centralized networks that delivered traffic to advertisers.

Ad networks acquired traffic inventory from publishers, segmented it, then sold it to advertisers in bulk based on CPC (Cost per Click) or CPM (Cost per Thousand Impressions) models.

And just like that, both parties were happy.

Advertisers got the exposure they wanted, and publishers got an extra revenue stream.

But what about the users?

As it turned out, grouping together a large number of publishers who don’t have similar content isn’t exactly user-friendly.

In the early days, most ad networks kept their publisher network private.

Most times, advertisers had no idea of what websites their ads got displayed on. And more often than not, their brand was associated with low-quality websites.

The ads didn’t do much for the user’s experience either. Most of the time, an ad had almost nothing to do with the content of the website it was being displayed on.

This created frustrating experiences for the users and drove them away from both the publisher’s website and the advertiser’s ad.

As the market developed, the number of ad networks increased, fragmenting it bit by bit. Every ad network created its own network of publishers, and advertising to large audiences became increasingly harder.

So when should you choose an Ad Network?

To understand where the ad network stands in the ad network vs. ad exchange debate, we need to go through its best purpose. You can use an ad network at its best when you’re looking to reach an audience as wide as possible in your market without having to coordinate with every website you want your ads to be featured on.

By leaving the algorithm to do the ad placement according to your targeting criteria, you will save both time and energy. However, the size and budget of your campaign remain at your choice, making ad networks suitable for both small and big companies.

Introducing Ad Exchanges

DEF. An ad exchange is a digital marketplace where people can buy and sell advertising space based on an RTB (Real-Time Bidding) system.

As opposed to the ad network’s traditional price negotiation technique, ad exchanges are more technology driven. Their automated systems ease the bidding process between advertisers and publishers.

Ad exchanges help publishers maximize their traffic inventory. At the same time, they help advertisers increase the transparency of the process. This allows advertisers to buy traffic from multiple publishers without having to negotiate with each of them individually.

But the system wasn’t perfect.

The problem is that ad exchanges are a little like the Wild West. Billions of ad impressions flow through these digital marketplaces each day. This makes it impossible to keep track of all the sellers and buyers.

Ad exchanges lack regulations, so it’s usually difficult to tell where your ads will show up (or who is bidding for your ads).

When should you use an Ad Exchange?

So, in the ad network vs. ad exchange debate, the ad exchange stands for control. An ad exchange is the best choice if you want to see where your ads are featured and at what cost.

They give you a transparent view of where the traffic comes from and the quality of the websites your brand gets associated with. For more control, you also have the possibility to blacklist certain websites and audiences.

Even though it seems to give more control over your display campaigns, you should keep in mind that advertisers and publishers have a growing concern regarding digital ad fraud, malware, and bot activity throughout ad exchanges.

What are Demand-Side Platforms?

DSPs are very similar to ad exchanges.

DEF. A Demand-Side Platform is a software used to buy advertising space automatically, thus removing ad buyers and salespeople from the process. This is commonly known as programmatic advertising.

Programmatic DSPs help advertisers buy traffic or impressions from a broad network of publishers. That traffic can be segmented based on demographics, location, or previous browsing behavior.

The whole bidding process takes place through an ad exchange, where publishers list their available ad space. The DSPs then decide which spaces to buy for the advertiser and acquire them through real-time bidding.

And while this may sound like a complicated process, it actually happens in milliseconds while a user’s computer loads a web page.

When compared to ad networks and ad exchanges, one of the main benefits of DSPs is the ability to buy, serve, and track ads using a single tool.

Moreso, DSPs provide advertisers with tools that can improve their campaign performance, such as contextual targeting, retargeting, or capping.

When should you use DSP advertising?

When you’re considering moving to a demand-side platform, you’re actually thinking of going to the next level of digital advertising.

If you want to automate the process of media buying, you should go for programmatic advertising with a DSP.

The DSP will give you the ability to efficiently manage several ad exchanges in one dashboard, providing extensive support. It also prevents your budget from being wasted on exposures that guarantee little to no returns, thus improving your ROI.

However, as good as DSPs sound, they can be quite expensive and complex to learn and only make sense if you allocate a few thousand dollars per month to your advertising budget.

SIDENOTE. While advertisers have DSPs, publishers have SSPs (Supply-Side Platforms). An SSP platform allows them to better manage their traffic inventory by connecting directly to numerous ad networks, ad exchanges, and DSPs.