What is an AdExchange and how advertisers use it?
The AdExchange is the ecosystem in which the magic of programmatic advertising takes place, very much in vogue in recent years due to its effectiveness in impacting clients with the targeted ads based on their interests.
AdExchange: a definition
More specifically, we define the AdExchange as a digital marketplace of advertisers and media. The actors of the system sell and buy, in real-time bidding, digital advert impressions. It is usually used to sell advertising impressions on display, video and mobile.
In an AdExchange there is no human intervention as such, the spaces are purchased in an automated way. The decision of the advertiser depends on many factors. And the decisions are made in real time, including the fingerprint of the user who will receive the impression.
AdExchange on the advertiser’s side: The DSPs
To properly understand the operation of an AdExchange, you must first understand what happens on the advertiser’s side. When a company wants to advertise programmatically and therefore use the ecosystem of an AdExchange, it gets in touch with a DSP.
A DSP (demand side platform) receives the ads from the companies with their the KPI’s looked for. For example, cost per thousand impressions. It also receives the segmentation of the target audience.
Using this data, the DSP technology qualifies the campaigns of advertisers based on criteria such as visibility and brand safe, which ensure that the ads will not appear on websites unsuitable for advertisers.
AdExchange on the publisher side: The SSPs
On the other side of the system, there are publishers who want to sell their media in an automatically at the best possible price. Their intention is to maximize their advertising revenue.
For this, they use the SSP (Supply Side Platform). This is the technology that gives them access to the AdExchange and accepts or rejects the impressions that arrive from the DMPs and the companies. The SSPs use an algorithm that favours publishers. For example, when two eligible advertisers want their ad to go out in a specific space, the SSP guarantees that the one who is most willing to pay wins.
The SSP also establishes the minimum prices for which publishers sell their spaces. The advertiser that wins a bid in real time will only pay one cent more than the second higher bidder.
The data layer: The heart of the AdExchange
Between the DSPs and the SSPs, there is the center of the AdExchange. The data management platforms (DMPs) communicate both sides and accept or reject impressions. The base for these decisions is the data they incorporate about the audiences they want to reach.
In conclusion, the AdExchange connects advertisers, user data and media in real time, optimizing each print and ensuring that companies reach their ideal audience, publishers receive quality advertising and according to their support at the best possible price, and users receive advertising according to their tastes and interests. That’s why we can consider it a win-win system.
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