What is the function of an exchange in digital advertising?

The function of an exchange in digital advertising primarily revolves around facilitating automated auction-based pricing. In this context, an exchange acts as a marketplace where advertisers and publishers can connect to buy and sell ad inventory. The automated auction process allows multiple buyers to bid on advertising impressions in real-time, which ensures that the ad space is sold to the highest bidder. This dynamic approach allows for more efficient pricing and improves the opportunity for advertisers to reach their target audiences at the right time.

While managing media buying and selling, serving ad creative, and tracking performance metrics are all important aspects of the digital advertising ecosystem, they are typically handled by different players within the ecosystem. An exchange's core functionality is centered on the auction process, thus making it integral to the efficiency and effectiveness of digital advertising transactions.