An ad exchange is a digital marketplace where advertisers and publishers buy and sell ad space in real-time, kind of like a stock market—but for ads. It connects websites and apps that want to sell space (called publishers) with brands and businesses that want to display ads (called advertisers).

Here’s how it works in simple terms:

Imagine you run a travel blog. You have space on your site for ads but don’t want to reach out to companies one by one. Instead, you connect your website to an ad exchange. At the same time, companies like airlines or hotels use the exchange to find places to show their ads to people who like travel.

When a visitor clicks on your site, the ad exchange runs an auction—instantly. Advertisers place bids to show their ad to that specific visitor based on factors like location, browsing history, or device. The highest bidder wins, and their ad is shown—often in just a few milliseconds.

Ad exchanges are a key part of programmatic advertising, which automates the buying and selling of ads. They support various ad formats like banner ads, videos, mobile ads, and even connected TV.

Popular ad exchanges include Google AdX, OpenX, and Xandr.

For advertisers, ad exchanges offer access to a wide audience without dealing with each site directly. For publishers, they provide a way to earn revenue by filling ad space efficiently and often at the best possible price.

As digital advertising evolves, ad exchanges are becoming smarter, faster, and more personalized—changing how ads reach us every day.