The digital advertising ecosystem is large and neverendingly complex, which begs the question: Where exactly do you begin?
For many advertisers and publishers, the ad network has become a reliable on-ramp to the world of digital advertising.
And these players want in for good reason: As of 2023, global digital ad spend has reached an estimated $627 billion. Fast-forward to 2026, and that number is projected to soar to $836 billion. This is far from pocket change—it’s a testament to the seismic shifts in advertising strategy, with digital platforms taking the lion’s share.
With so much money on the table across digital channels, advertising networks have emerged as crucial player, especially for those looking to get started in digital advertising. But what is an ad network? How do they work? And should they be part of your media plan or monetization strategy?
We’re glad you asked.
What is an ad network?
An advertising network—commonly known as an ad network—is essentially a matchmaker for the digital advertising ecosystem.
In simple terms, an ad network connects advertisers looking to launch campaigns with publishers looking to sell ad space on their digital properties, like websites and apps.
The advertising network aggregates remnant ad inventory (i.e. impressions not sold via direct sold campaigns) from various publisher websites, then matches it with advertiser demand. This process is driven by sophisticated software which automates much of the heavy lifting, making the buying and selling of ads a more seamless experience.
But this automation also comes at a cost: the black box effect. Because these networks are geared towards performance, they can often be ‘blind’, meaning advertisers won’t have transparency into exactly where their ads are being shown. The alternative here would be to leverage a full-funnel DSP solution like Criteo Commerce Max, which offers much more control and transparency.
How do ad networks work?
Understanding the mechanics of an ad network can be complex, but it’s easier to digest when broken down, step by step, from one side of the supply chain to the other.
Here’s how the magic happens:
Step 1: Advertiser onboarding
First off, advertisers need to sign up and create an account. They’ll upload ad creatives, set budgets, adjust frequency caps, and define targeting parameters. Depending on the network, there’s usually a range of ad formats to choose from, such as display ads, native ads, or video ads.
Step 2: Publisher onboarding
On the flip side, publishers also sign up and list their available ad space, often referred to as ad inventory. They’ll specify the type of ads they’re willing to host, the ad space dimensions, and sometimes even the pricing. Large publishers often have multiple ad networks in their stack to maximize fill rate for their remnant inventory, leveraging these advertising networks as something of a safety net.
Step 3: The role of the ad server
Once both parties are onboarded, the ad server comes into play. This is the technology backbone of the ad network. It uses under-the-hood logic to match the ads from advertisers with the appropriate publisher websites automatically. This process takes into account lots of different factors, including content relevance, audience targeting, and historical performance.
Step 4: Ad placement and launch
After the ad server does its matching, the ads are placed on the publisher’s website. This is known as ad serving. But it’s not a one-and-done deal. The ad server continually optimizes placements in real time based on performance metrics like click-through rates (CTR) and conversions.
Step 5: Performance tracking
Once the ads are live, both advertisers and publishers can track performance through the ad network’s dashboard. Metrics like impressions, clicks, and conversions are standard. Some advanced networks even offer heat maps and user engagement metrics.
Step 6: Payment and settlement
At the end of the billing cycle, advertisers are charged based on the pricing model they’ve chosen—be it CPM, CPC, or CPA. Publishers, on the other hand, receive payment based on the revenue generated from hosting the ads.
Ad networks vs. ad exchanges
As is tradition in the ad tech space, there’s often confusion around key terms, including both “ad network” and “ad exchange”. So, let’s shine a little light on the differences.
While both ad networks and ad exchanges serve the same fundamental purpose—facilitating the buying and selling of online ad space—their operational nuances differ. An ad network acts as a broker, collecting inventory and selling it to advertisers at a markup. Ad exchanges, however, operate more like a stock market, in that they allow advertisers to bid on ad space in real time—often leading to more competitive pricing and more precise targeting.
Types of ad networks
As ad networks have matured, they’ve diversified to cater to specific needs. Whether you’re an advertiser or a publisher, understanding the types of network available can be a useful decision-making tool.
With that in mind, here’s an overview of the key types of ad networks today:
Vertical ad networks
As the name suggests, these networks focus on a specific industry or niche. The benefit to advertisers? A highly targeted environment and a better chance of reaching the right audience. For example, there are ad networks specialized in health and wellness, giving advertisers in the healthcare space the opportunity to have their ads placed on websites catered to audiences interested in healthcare.
Premium ad networks
This type of network offers high-quality ad inventory from top-tier publisher websites. They’re the go-to choice for brands that want to ensure their ads appear in premium digital real estate to benefit from both visibility and increased credibility.
Format-specific ad networks
These are specialized networks that focus on a particular ad format. For example, some networks excel in native ads, while others might be geared towards video or in-app advertising.
- Display networks. These networks are the bread-and-butter of the ad ecosystem, offering a range of display advertising formats including banners, interstitials, skyscrapers, and more. One of the most long-running examples of a display network is the Google Display Network.
- Native networks. Taboola and Outbrain are the most well-known players in this space, offering ads which blend seamlessly with a publisher’s content to deliver a more natural ad experience.
- Video networks. Companies like Nexxen (formerly Unruly and Tremor Video) offer a video ad network, providing a platform for more dynamic and engaging content leveraging outstream video formats.
- In-app networks. AdMob by Google is a prime example of an in-app ad network, specializing in ads which are placed within mobile apps.
It’s worth noting here that, as you might expect, managing multiple networks to target different verticals, formats, or publishers, can become a bit of a juggling act. Likewise, aggregating reporting across multiple networks can be tricky. This is where a comprehensive DSP solution might make more sense.
The benefits of ad networks
Now that you have an understanding of what ad networks are and how they work, the question remains: Why use one? Let’s break it down.
For advertisers
- Efficient budget utilization. Algorithms are in place to ensure that your ads reach your target audience, though the supply paths aren’t always transparent.
- Broader access to ad inventory. Advertisers have access to a diverse range of publisher websites, increasing the likelihood of finding the right audience for your ads—even if you can’t control exactly where they’re placed.
- Simplified operations. Managing campaigns becomes easier when you can do it all from one dashboard, saving you time and resources, but trading off fine-grain campaign control in the process.
For publishers
- Monetization opportunities. Advertising networks provide an avenue for publishers to monetize their websites through various ad formats and pricing models, though often at lower CPMs compared to options like full-featured SSPs.
- Simplified ad management. Instead of juggling multiple advertiser relationships, publishers can manage everything through a single platform, making the process less cumbersome. Though, again, this can result in a reduced revenue ceiling.
- Data and insights. Most networks offer analytics and performance metrics, allowing publishers to understand what’s working and what needs adjustment.
There you have it—the ins-and-outs of the advertising network.
So, if your next media plan needs a bit of extra oomph or you’re looking to maximize monetization, choosing the right ad network can provide the boost you need to optimize those outcomes.
