Networks and Exchanges

Emily Riley | May 30, 2007, 02:38 PM

I’ve been having fun pouring over our new Advertiser Executive Survey, which just came back a week ago. This is the first time we had a question that broke out ad exchanges and ad networks separately. I’m getting a lot of inquiries regarding the two. It seems like advertisers aren’t sure what the differences are. The survey shows that networks are about three times more popular than exchanges. Networks have also been around three times longer of course. Networks are most popular with the largest advertisers, which is no surprise, since networks have long offered great reach. Exchanges seem to be more size-agnostic, but that may be because they attract the smaller guys who couldn’t hack it on the networks, where competitive pricing continues to increase. As exchanges mature and more advertisers join, I’m sure their pricing will go up too.

The panel I hosted a month ago at Ad:Tech about the subject was well attended, which I think was based as much around the recent acquisitions as the debate over the differences between networks and exchanges. Despite the growing awareness of exchanges, I am actually not a big proponent of having two different categories in the industry. I’d prefer that exchanges were called something like "open networks" or "self-serve networks," (I’ve also heard “meta-networks.”) Both networks and exchanges aggregate advertisers and publishers. Both use price-based optimization to make split decisions on what ads to serve. Both allow networks to join as a whole entity. The main differences seem to be that exchanges offer less slicing and dicing to advertisers, and more of a free ad-serving option for publishers who want that (instead of using DFP for example.) Additionally, networks have long-standing relationships with some of the best and biggest publishers out there. Exchanges are in the process of catching up. Obviously, exchanges got a big PR boost when Yahoo bought Right Media. In either case, I am a big fan of optimization in general, be it black box or otherwise. So I do encourage advertisers to test both networks and exchanges, and see which of the bunch work the best.