Ad exchange

An ad exchange is a marketplace that runs real-time auctions for individual advertising impressions, receiving supply from publishers or SSPs and demand from DSPs, and clearing each impression to the winning bid under published auction rules.

OpenRTB is written from the exchange's point of view: the exchange sends a bid request with tmax, the auction type at (1 for first price, 2 for second price plus) and the floor, receives bid responses, and notifies the winner with the clearing price through the ${AUCTION_PRICE} macro (OpenRTB 2.6, sections 3.2.1 and 4.4). Since 2.6 the exchange can also tell losing bidders the minimum they needed through ${AUCTION_MIN_TO_WIN} (OpenRTB 2.6, section 4.4.1).

Most exchanges are operated by SSPs; the largest, Google's AdX, is operated by the company that also runs the dominant publisher ad server, which is why the auction rules of exchanges have been the subject of regulatory and court scrutiny in the UK, EU and US (CMA, July 2020). A private ad exchange is the same machinery run by one company for its own inventory and invited demand, which is how a retail media network with an owned stack sells offsite or curated inventory; the setup is described in the private ad exchange setup guide.

Example: an exchange receives an impression from a publisher, sets at: 1 and bidfloor: 1.50, receives bids of $2.10 and $1.80, awards the impression to the $2.10 bidder at $2.10 (first price) and fires the win notice with ${AUCTION_PRICE} = 2.10.

Related: SSP, first-price auction, floor price, OpenRTB.

Source: IAB Tech Lab, OpenRTB 2.6; UK CMA market study (July 2020).

1. OpenRTB 2.6, section 4.4.1
2. CMA, July 2020