So you want to turn your hobby into a profitable source of income? Many dream of being able to make money with their blog. This doesn’t just happen overnight: a lot of work and patience must be invested. You first need to acquire readers before you can even start to think about options like banner advertising and sponsored posts. What do you need to get a commercial blog up and running? And which...
There are many options for advertisers to place their advertisements online, allowing them to reach potential customers. Thanks to real-time advertising (buying and selling advertising banners in real time), advertisers and publishers have had lots more options to choose from in the last few years. Everything centers on ad exchanges, which can be described as ‘the Wall Street of real-time advertising’, where supply and demand meet.
What are ad exchanges?
The term ad exchange refers to an online marketplace where publishers and merchants come together and trade advertising space. Owners of websites, blogs, or online magazines act as publishers and offer their available advertising space. Individual advertisers, marketers, or networks are known as merchants; their job is to come up with prices for the available advertising space.
The platform automatically calculates the prices for the advertising space and stock in real time. The calculation is based on supply and demand. The auctioning process, whereby advertisers can bid on unused advertising space, is known as real-time advertising and real-time bidding.
Real-time advertising (RTA) is the trading of virtual advertising products (e.g. banners) in real time. These fully-automated marketplaces were developed in order to facilitate and speed up complicated, lengthy negotiations.
Real-time bidding (RTB) is a specific RTA process. Advertisers bid for ad impressions (the amount of anticipated ad placements) in real time. Bidding runs automatically via different tools; the ad with the highest offer wins and is then advertised.
How do ad exchanges work?
Ad impressions are traded on ad exchange platforms. Publishers enter their ad impressions into the supply-side platform, a technology platform that enables them to manage their advertising space. On the other hand, there’s the demand-side platform, which focuses on merchants’ requests.
Ad exchange: the term ‘ad exchange’ describes a marketplace where advertising stock (page impressions) are traded.
Supply-side platform (SSP): supply-side platforms are used by publishers to manage sales. Offers are organized and supplied here.
Demand-side platform (DSP): merchants and advertisers use demand-side platforms to relay their requests. DSPs use data from advertisers to organize and optimize demand.
Take the following scenario: a user visits a website whose publisher offers ad impressions through an ad exchange. The SSP and DSP then begin to communicate with one another.
- The SSP provides relevant information like the content categories for the advertising space, user ID for each impression, or additional data for targeting and re-targeting.
- The DSP checks this data and decides whether a campaign should be advertised and, if so, which one.
- The DSP then names a bid (on the advertiser’s behalf) for the relevant advertising space or ad impression.
- The SSP receives various bids and calculates the highest bidder (via RTB). The winning bid is then advertised.
- The user doesn’t notice any of the process, as it only lasts a few milliseconds.
Pros and cons of ad exchanges
With ad exchanges, a large amount of valuable data is connected over different platforms and systems. This makes it easier for the advertiser to tailor their services to their target group. Ad exchanges offer advertisers:
⇒A reduction of scatter loss
⇒An increase in return on investments (ROI)
⇒An improvement on performance
Real-time marketing is currently one of the fastest-developing online advertising solutions. New systems are constantly being integrated into the respective platforms, and processes are connecting with one another better. The United States is the frontrunner when it comes to ad exchanges.
An overview of the biggest ad exchange providers:
Ad exchanges in the marketing plan
In the United States, the ad exchange market is starting to replace traditional display marketing. Publishers are presented with new possibilities for increasing their earnings through blog or website monetization. The system is also beneficial to merchants and advertisers: they can reach their target group more easily through exact targeting and thus use their advertising budget on optimized ad placements. If you would like to try your hand with the topic of ad exchange, you can make use of these new technologies.