How does an ad exchange make money?

What exactly is an Ad Exchange?

An What is an ad exchange? is a big pool of ad impressions. Publishers put their Ad impressions into the pool hoping someone will buy them. Buyers then pick which impressions they wish to purchase using technologies like demand-side platforms. Those decisions are often made in real time based on information such as the previous behavior of the user an ad is being served to, time of day, device type, ad position and more.

Ad exchanges is a digital marketplace that enables advertisers and publishers to buy and sell advertising space, often through real-time auctions. They’re most often used to sell display, video and mobile ad inventory.
Few major Ad Exchanges includes Right Media which is owned by Yahoo and DoubleClick for Publisher Ad Exchange which is owned by DoubleClick.

Now how does an ad exchange make money?

A lot of people has this question in their mind and have multiple reasons for ad exchange revenue model, some have it right and some not. So let’s talk about all the correct options on which ad exchange revenue model works so that the confusion goes away!

  • First and foremost is the setup Fee that they charge, this can be a flat rate.
  • As a publisher you pay the commission out of the budget spend by the advertiser on the website, the percentage may reach to 20% also. E.g. if 5% is the commission then the inventory bought of $10,000 will make him pay $500 to the exchange he is making use of. Some exchanges make the commission out of the requests made to the exchange, i.e. they may have slab as per number of requests. Just like an ad server charges as per impression slabs.
  • As an advertiser also you pay commission to the exchange, the percentage depends on the exchange plus the deal between the both.

The above three are the major reasons by which ad exchange makes money, just the deals may vary accordingly!

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