The notions of ad network and ad exchange are very similar as they both have something in common: they deliver free inventory from publishers and restore it at one location to be sold and filled with the ads.
The question becomes especially complicated when both of them can have a demand side platform and, in general, live in programmatic ecosystem. However, understanding of uniqueness and peculiarities of each one will help you to understand business operations better and optimize your own processes.
Advertising network is a sort of third party that help advertisers and publishers to meet and help with buy-sell ads process. The network gathers information about free inventory from advertisers and then offers each seller possible positions according to his requirements and demands. The inventory is often divided into special groups where division is made on the ground of audience segments. As example of advertising network – Polus.media provides quality services for advertiser and publisher and working with different pricing models -CPI, CPM, CPC etc
Ad exchange is a place where advertisers and publishers come to sell and buy without intermediaries. Of course, the very exchange can seem as the intermediary, but it is used to make bids in real time. It can be said to work like an auction to sell each place for an advertisement at the highest place.
Top features to define whether it is an Ad Exchange or Ad Network
Difference in positioning
Networks are always companies by nature, like Google AdSense.
While Exchanges generally look like a big market where anyone who wants can come and sell the inventory.
Example: everytime you come to the roofed market to buy an apple you have visited some sense of Ad Exchange, as the sellers were offering their prices and you have bought at the most suitable one; they are no longer interested in you when you have made a purchase.
Issue of income
Each publisher at network has its own understanding of the price of his inventory, it may be either too expensive as well as too cheap – everything is stated according to self-perception.
Work at Ad Exchange implies opportunity for advertisers to set the highest price they are ready to pay.
Note: the price for inventory at networks is stable, while inventory of the same website may be cheaper or more expensive at any moment – a lot depends on type of the users and offers from advertisers.
Types of ads on website
If we talk about Networks, they generally have the upper hand in posting the ads on the inventory and publishers may often see the materials irrelevant to their content.
The ads are different for each particular user as the advertisers interested in the person.
Type of inventory
Generally the Networks specialize in primary inventory, while Exchanges are ready to work with all types of it.
Time to launch
Exchanges don’t need extra time for adjusting and can be start immediately, while cooperation with network will require some time for campaign optimization.
While everything looks a bit in darkness for users of networks, the picture is a bit more clear at Exchanges: the advertisers can see where they buy inventory as well as bids of other competitors.
As you see, both things have a lot in common and a lot of different moments, too. It would be wrong to say that networks are better than ad exchanges, they serve for different purposes. Good news is that you can use them one by one, or together to have more opportunities from your business.