Glossary of Mobile Advertising Terms
An ad exchange is a digital marketplace where advertisers and publishers buy and sell advertising inventory. This usually happens through real-time auctions, which means that the bidding is happening in real time.
Basically, anyone can buy from an ad exchange. Advertisers and agencies frequently employ the use of demand-side platforms (DSP), while publishers do something similar with supply-side platforms (SSP).
Publishers set a minimum price for their available ad space (they might also set a filter on accepted advertisers). Advertisers that want to buy some advertising space will enter a real-time bidding process. If their bid is the highest, they win.
All of this takes less than a second and if there is a new inventory, this whole process will gets repeated. Advertisers also have the ability to adjust their bidding with various parameters (geolocation, age and so on), which will help them improve their ads. Ad exchanges can be open or private. Privat
e ad exchanges give more control to publishers on who can buy their inventory and at what price, as opposed to the open ad exchange where pretty much anyone can buy advertising inventory. In the end, both publishers and advertisers benefit from ad exchanges, as publishers can make their inventory more widespread, while advertisers have a much larger choice of advertising inventory.