What is an ad network?
As explained in Wikipedia, “an advertising network or ad network is a company that connects web sites that want to host advertisements with advertisers who want to run advertisements.”
So essentially, the relationship consists of 3 parties in a ad network: the seller(publisher), the buyer(advertiser) and the network (a media representation company). The ad network will help publishers to sell their inventory to potential advertisers that wish to have their ads shown on exclusive or targeted websites.
What is an ad exchange then?
Yahoo! explains it as a market for advertisers, publishers and networks, which are interconnected on a common platform and have open access to each others’ supply and demand. They trade inventory (ad spaces) in a real-time auction, letting the market determine pricing.
Ad networks and exchanges The main difference between an ad network and an exchange is that an ad network fully operates and controls all that happens in its marketplace whereas the exchange is a central platform that many buyers and sellers use to run their own businesses. However, it is a thin line as some exchanges do have some form of control in place. A second difference is that ad networks only work with advertisers and agencies and an exchange also connects to various ad networks, more like a marketplace.
* Ad network optimisers and exchanges
The ad network optimiser and exchange are often confused because their promises to the publisher are similar. The key difference is that an ad network optimiser is 100 per cent agnostic towards other ad networks and exchanges. The result is that most ad networks and exchanges can coexist happily.
Secondly, in contrast to exchanges, with an ad network optimiser, everything that happens in the ‘mini-market place’ is controlled and managed, while technology is used to improve results. This ensures quality control and avoids 'cannibalisation' because permission to buy ad space, whether directly or indirectly, is restricted. However, in general, with exchanges buying space is open to all, and selling is limited to publishers.
In summary
In summary, ad network optimisers create efficiencies for both publishers and networks, creating additional value in the online advertising ecosystem. Working with multiple ad networks offers publishers maximum market buying power. For networks it connects them to more publishers in more markets than they would be able to achieve directly on their own.
Difference Between Ad Networks and Ad Exchanges
One important note of clarification, an ad network is simply a 3rd party that websites partner with to serve ads on their site in return for part of the revenue generated. There are literally dozens of large ad networks, including Google's AdSense, Yahoo! Publisher Network, and AOL's Advertising.com network. Typically, an ad network takes care of unsold inventory for larger sites, or all inventory on smaller sites that can't be sold by a direct salesforce.
On the other hand, an advertising exchange is a marketplace that attempts to optimally match sellers (publishers' available inventory) and buyers (advertisers' desired campaigns). In many cases, some of the buyers include ad networks. For example, in the DoubleClick exchange, Advertising.com will be one of the initial groups testing thesystem.
An ad network is basically a mini marketplace with full control of the whole system but will get complex when the publishers and sellers grow overwhelmingly in numbers.
As the complexities increase for ad networks, the ad exchange comes into the picture providing a technology platform which uses more dynamic systems and management tools while providing a common ground for ad networks to compete in an auction-like marketplace.
