Ad network

An ad network is a company that buys or represents advertising inventory from many publishers, packages it by audience, topic or format, and resells it to advertisers at prices the network sets.

Ad networks came before real-time exchanges. Publishers sold their best inventory directly and needed buyers for the rest, the so-called remnant. The UK CMA describes how networks bought remnant inventory from many publishers at pre-agreed prices and repackaged it for advertisers. The publisher's ad server called the networks one after another in a "waterfall", starting with the one that had agreed the highest price (CMA, Appendix M, paragraph 24, 1 July 2020).

The difference from an exchange lies in who sets the price and who sees the auction. An exchange runs an auction for each impression under published rules and passes the clearing price through. A network usually buys at one price, sells at another and keeps the margin. Many networks now run exchange or SSP technology, so the labels overlap. The comparison of ad exchanges, ad networks and SSPs shows where the lines still fall.

Header bidding, which lets many buyers bid on the same impression at once, spread from 2015 to fix the waterfall's flaws, according to the same CMA appendix (paragraphs 29 to 31).

Example: A publisher sets a waterfall: network A at a $2.00 CPM, network B at $1.50 and network C at $0.80. If A declines an impression, B is called, then C. An advertiser in network C willing to pay $2.40 never sees the impression when A or B takes it first.

Related terms: ad exchange, SSP, header bidding, ad server, fill rate.

Authoritative source: UK CMA, market study Appendix M, paragraphs 23 to 31 (1 July 2020).