Ad exchange

Main article: Online advertising

An ad exchange, in online advertising, is a technology platform that facilitates the buying and selling of media advertising inventory from multiple ad networks.^[2] Prices for the inventory are determined through real-time bidding (RTB). The approach is technology-driven as opposed to the historical approach of negotiating price on media inventory. This represents a field beyond ad networks as defined by the Interactive Advertising Bureau (IAB),^[3] and by advertising trade publications.

A visualization of the real-time bidding system in online display advertising.^[1]

History

Before exchanges, publishers sold leftover ad space through advertising networks. These networks aggregated inventory from many sites, but didn't offer real-time bidding. In the early 2000s, Brian O'Kelley created the first ad exchange at Right Media, known as the Right Media Exchange, which officially launched in 2005.^[4] Right Media's ad exchange built algorithms for predicting, budgeting, and pacing, which enabled real-time bidding (RTB). Yahoo continued to build upon this technology after acquiring the company in 2007.

Around the same time, Jason Knapp and Fabrizio Blanco were also working on the concept of RTB at Strategic Data Corp.^[5] Knapp filed a patent on their RTB technology in 2006.^[6] In 2007, Google acquired DoubleClick and began building what would become the industry's most influential ad exchange, DoubleClick Ad Exchange (AdX), which is now part of Google Ad Manager.

As the ad exchange model matured, specialized layers formed. Demand-side platforms were built to help advertisers bid intelligently in real-time across exchanges. Supply-side platforms were built to help publishers manage and optimize their inventory before sending it into exchanges.

Examples

Notable ad exchanges include:

• AppLovin (which recently acquired MoPub)
• FreeWheel (owned by Comcast)
• Google Ad Manager (also known as Google Authorized Buyers, formerly known as AdX, and now part of Google Ad Manager)
• InMobi
• Magnite Inc (formed by the combination of Rubicon Project, SpotX, and Telaria)
• OpenX (company)
• PubMatic
• Smaato (now part of Verve)
• Xandr (formerly AT&T AdWorks which bought AppNexus, now owned by Microsoft)
• Yahoo (formerly AOL, Brightroll, OATH and other entities rolled into the Yahoo brand)

See also

• Demand-side platform
• Online advertising
• Supply-side platform
• Header bidding