For new marketers, a common point of confusion lies in trying to understand the difference between two key sources of advertising inventory: advertising networks and advertising exchanges.
And who can blame them? After all, ad networks and ad exchanges can appear very similar to those approaching them for the first time (or even the second, third, or fourth time—this stuff is genuinely confusing, even for seasoned professionals). Both inventory sources empower marketers to purchase media from across a range of publishers, and to do so in a way that hones in on specific categories of consumers.
But, as always, the devil is in the details. Networks and exchanges have a handful of key differences between them that are absolutely crucial to making smart media-buying decisions. If you’re not up to speed, it could be difficult to align your digital marketing spending with your business objectives.
Don’t worry, though, we’re here to help. In this blogpost, we’ll define these two options, explain how they differ, and take a quick look at how the MediaAlpha Exchange Platform delivers efficient, scalable campaigns for high-consideration advertisers. By the time you’re done reading, you’ll practically be an expert.
Ad networks are aggregators, ad exchanges are marketplaces
First, it’s helpful to define ad networks and ad exchanges.
An ad network is an aggregator. It offers advertisers access to media impressions from across a variety of publishers at a fixed price. The marketer can sometimes define key parameters of the campaign—such as the broad demographic details of the likely audience and the category of website—but not all of them. The ad network is responsible for deciding how much to charge per ad impression and which websites the ads appear on.
An ad exchange is a marketplace. Marketers purchase ad impressions from a variety of publishers directly through the exchange, and they get to choose for themselves which publishers they buy from and how much they pay. Depending on the exchange, marketers may also have the ability to set more precise targeting parameters that allow them to reach specific consumer groups based on demographic information and online behavior.
Ad networks can be easier to use, but ad exchanges provide greater efficiency due to their increased transparency and control
The primary benefit of an ad network is ease of use. You can input a few targeting parameters and the number of impressions you want, and, voilà, the ad network can take it from there.
However, this simplicity comes at a real cost: the transparency and control you need to evaluate your spending and optimize your performance.
For instance, ad networks don’t give you the control to choose which specific publishers you want your ads to run on, or how much you’re going to pay to appear on each specific site. In effect, you’re buying a big bucket of undifferentiated ads at a flat rate. Often, this means you end up overpaying for some of the low-performing traffic in your bucket and not getting enough of the high-performing traffic you need.
The other issue is that once you’ve finished buying your ads from an ad network, you don’t get transparency into how each publisher performed. All you see are aggregate performance statistics across all the ads you bought from the network. Due to this lack of transparency, there’s less of an opportunity to adjust your media-buying strategy for greater performance moving forward.
By contrast, ad exchanges can take a little more maintenance time, but they deliver the transparency and control you need to execute, evaluate, and optimize your campaigns for maximum performance.
With an ad exchange, it’s up to you to decide which sites you advertise on and what price you pay for each impression or click. For example, instead of getting a report from an ad network that it has run a certain number of impressions across sports publishers, exchange buyers can choose how many of their ads to place on ESPN.com and how much money they want to pay for each of those ads. After the campaign is over, they can compare their performance on ESPN.com against their performance on other sports sites, and then adjust their spending accordingly.
At the end of the day, both ad networks and ad exchanges can provide real value to marketers, and it might make sense to use both depending on the situation. If you have a scenario where you’re looking to scale quickly and you’re not especially price-sensitive, it might make sense to purchase traffic from an ad network. If you’re in a spot where you’re looking to get the most out of every dollar you spend on customer acquisition, you’ll probably want to invest in traffic from an ad exchange.
Ultimately, there’s no one right answer—it’s up to you to decide what works best for your business goals.
The MediaAlpha Exchange Platform helps advertisers maximize their sales by paying the right price for every lead
When it comes to ad exchanges, few offer more transparency and targeting controls than the MediaAlpha Exchange Platform. By using our exchange, you can make precisely targeted media buys across a range of publishers that serve consumers as they get close to purchasing high-consideration products like auto and health insurance.
Crucially, we offer full transparency into every detail of your spending, allowing you to determine exactly how much a publisher’s leads are worth to your business. With this information in hand, you can bid the right price for every lead, adjust your bidding strategies in real time, and maximize your customer acquisition efficiency. And if you ever hit a wall, you can always work with our client success team to test new ideas and see how they improve return on investment.
If you have any questions—about our platform, the nuances between a network and an exchange, or anything related to digital ad-buying—we’d love to hear from you. Feel free to contact your client success rep or schedule a demo here.