image post
author image
Marketing Specialist

Ad Network vs. Ad Exchange vs. DSP – What’s the difference?

Advertising | Basics of Cryptocurrency | Publishing | Last updated November 9, 2018

If you’re only getting started in the world of crypto advertising, things might be a little bit confusing.

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

The 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.

So let’s see what the fuss is all about.

Before we dive into all the different platforms available in today’s advertising industry, let’s talk see what display advertising is.

1. The Evolution of Display Advertising

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

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

classic display advertising

Initially, the whole process of displaying ads was simple. Only 3 parties were 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.

2. What are Ad Networks and how they saved the day

Ad Networks partnered with publishers regardless of their size and created a centralized network that delivers traffic to advertisers directly.

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.

ad networks explained

But what about the users?

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

Most Ad Networks kept their publisher network private. Most of the times, advertisers had no idea of what websites their ads got displayed on. And more often than not, their brand was being associated with low-quality websites.

The ads didn’t do much for the user’s experience either. Most of the times, 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?

You should use an ad network 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 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.

Nonetheless, keep in mind that the ad placement choice done by an ad network isn’t always the most relevant.

3. Introducing Ad Exchanges

An Ad Exchange is a digital marketplace where people can buy and sell advertising spaces based on a 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 helped publishers maximize their traffic inventory. At the same time, it helped advertisers increase the transparency of the process. This way, advertisers could now buy traffic directly from a variety of publishers, without having to negotiate with each one.

ad exchanges explained

So…what’s the catch?

Well, to be honest, Ad Exchanges are a little bit like the Wild West. Every day, billions of ad impressions flow through these digital marketplaces. It’s almost 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?

An ad exchange is the best choice if you want to closely track 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 there is a growing concern among advertisers and publishers regarding digital ad fraud, malware, and bot activity throughout ad exchanges.

SIDENOTE. A report conducted by Telemetry and published on BusinessInsider estimates that advertisers waste around $7 million a month on fraudulent clicks, most of it coming from botnets.

You can download and read the report (which was leaked to BusinessInsider) by clicking here.

4. What is a DSP?

DSPs are very similar to Ad Exchanges.

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

demand side platform explained

Programmatic DSPs help advertisers buy traffic or impressions across a broad network of publishers. But targeted to specific users 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 for bidding. The DSPs then decide which spaces to buy for the advertiser, and acquires 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 a DSP?

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). A SSP platform allows them to better manage their traffic inventory by connecting directly to numerous ad networks, ad exchanges, and DSPs.

Final Thoughts

So, you might be wondering, are these the final days of Ad Networks and Ad Exchanges?

Well, probably not.

As technology advances, the line between Ad Networks, Ad Exchanges, and DSPs is blurring.

Today, most Ad Networks have incorporated numerous tools used by DSPs, such as audience targeting, impression capping, and bidding system. At the same time, DSPs find themselves buying, repackaging and selling traffic inventory to advertisers at a premium.

When it comes down to comparing them, we can see that there aren’t that many differences between Ad Networks, Ad Exchanges, and DSPs.

Despite their automation, DSPs will never be able to drop one of the most fundamental parts of the advertising – human contact.

No matter how efficient the process of buying and selling ads becomes, businesses will always need someone to help them optimize their ads, to answer their questions, and to help them get their campaign on the right track.