What is an ad exchange?
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Plain language explainers to help you keep up with the evolving digital landscape.

Ad Exchange

What is an ad exchange? An ad exchange is a digital marketplace where advertisers and publishers can buy and sell ad space in real time through programmatic advertising. It connects demand (advertisers) with supply (publishers) efficiently through an auction system that values an ad placement by matching the prices buyers and sellers have set.

How does an ad exchange work? Ad exchanges work by auctioning off ad space to advertisers in real time. When a user visits a website or uses an app, the publisher's ad server sends a request to the ad exchange. The ad exchange then matches the request with relevant ads from advertisers. The highest bidder wins the auction and their ad is displayed to the user.

Why is an ad exchange important to marketers? Ad exchanges allow online advertisers to reach their target audiences with speed and precision — and at the most reasonable cost. Advertisers can use ad exchanges to target ads based on a variety of factors, such as demographics, interests, and browsing behavior. Ad exchanges also allow advertisers to track the performance of their campaigns and make adjustments as needed.

Who needs to know what an ad exchange is: Anyone who works on a digital advertising campaign  — from agency and publisher trading desk operators to data management platforms  —  has come in contact with an exchange. This includes job titles such as:

  • Digital marketing manager
  • Paid search specialist
  • Social media manager
  • Programmatic advertising specialist
  • Media buyer
  • Ad operations specialist
  • Publisher representative

Use ad exchange in a sentence: With the slow-death of the third party cookie, targeting ads through ad exchanges will need to rely on alternative sources of data.”