A common question we often hear from our clients in relation to Display advertising with Google is, “Which one is right for me — Google Ad Exchange or Google Display Network?”

Before we answer that question, we’ll take a look at Google Ad Exchange, which is commonly known as AdX (and formerly known as DoubleClick Ad Exchange), and Google Display Network, commonly known as GDN (and formerly known as Google Content Network). First, we should take a small step back and talk about the evolution of Display and clearly define the two options, because even Google has admitted that the distinction is blurred.

This question really stems from how Display has evolved from two different eco-systems and market participants into a larger ubiquitous media channel. For a long time in Display, media was sold via publishers’ direct sales force and any non-guaranteed remaining inventory was usually sold to ad networks that would bundle it and on-sell this to agencies and advertisers looking for additional scale. The advertisers who participated in this market tended to be very Display-savvy and utilized the channel for branding and traffic as well as direct-response purposes.

Digital advertisers who were almost solely focused on direct response business goals largely tended to stay away from Display as a channel due to the more complex nature of set-up, tracking and measurement of marketing spend. These advertisers looked to SEM (Search Engine Marketing), Affiliate and Email marketing instead. More recently, Google has tried to open the very large Display world to this group of advertisers by trying to replicate the experience of SEM.

With its 2007 purchase of DoubleClick (including its publisher ad exchange) and its own very large AdSense Network, Google has, for the most part, combined the two inventory pools while still having two methods for accessing this Display inventory.

AdX (Google Ad Exchange)
Google Ad Exchange was born out of DoubleClick Ad Exchange, which contained a lot of quality publisher sites that sold their non-guaranteed Display inventory via this channel. There were often controls placed around the type of advertisers that could get inventory on a given site to prevent things like competitor advertiser conflict with guaranteed-buy advertisers, brand association/safety, relevance, etc. Advertisers had access to things like targeting via vertical segments, and all buys were bid on a CPM (cost per thousand impression) basis.

Today, inventory accessed via the AdX route can be bought in “real time” (commonly known as “real time bidding” or “RTB”), which allows advertisers to make micro-second decisions at the impression level about whether to bid for that ad slot on parameters like the publisher site, ad placement, ad size and other retargeting/demographic/segmentation data. All of this data has given rise to technology platforms known as Demand Side Platforms (DSPs). These are the technology tools that advertisers and agencies increasingly use to optimize their marketing spend in Display as they are able to action all of this constant information flow in real time. (Efficient Frontier built a DSP to not only optimize Display media spend but also to interact with our SEM and Social Media Platforms).
 
GDN (Google Display Network)
The Google Display Network can be seen as Google’s SEM answer for Display. Essentially, Google took its AdSense network, which is largely used for text-based advertising, and repurposed it so that advertisers have easier and more direct access to Display advertising in an environment that is familiar to them. This was probably particularly valuable for the small-to-medium Enterprise market that would largely manage this in-house with less access to sophisticated tools and industry experts.

Today, inventory accessed via GDN using AdWords can be managed in much the same way advertisers used to manage content campaigns on SEM, but allowing for an additional range of ad formats beyond text including image, flash, rich media and video ads. To make things easier for this type of advertiser, bidding can still be done on a CPC (cost per click) or CPA (cost per acquisition) basis in addition to CPM bidding.
 
Which Route Is Best for Me?
There is obviously a lot of crossover between the two, but in truth it really comes down to control, scale and sophistication of your overall marketing efforts. Here’s an analogy that Google themselves use on their blog, which we referenced earlier:

a)      Using a DSP like Efficient Frontier to access AdX, with the ability to bid in real time at the impression level, is like a buyer managing their own funds using a sophisticated, premium online brokerage tool so has full detailed access to insights, etc.

b)      Accessing Display via the GDN using AdWords is like a buyer managing money via a broker using a managed type approach where there is less control and auction capabilities.

So in marketing speak, this translates to how much control and ability to optimize you desire with your Display campaigns. For an advertiser who has never done any form of Display before and wants to get a basic idea of how a campaign operates with non-text advertising, the GDN is a relatively simple step. Google can then match your Display ads usually based on the contextual theme of the keywords you input. (there is some ability to retarget/remarket via the GDN)

However, if you are an advertiser who really wants Display to be a major part of your marketing efforts and you want to fully understand and action the interaction the audience has with your Display creatives and other channels like SEM, then AdX would be your best option. This way you can bid at the impression level in real time for a particular user based on factors like where they are in your marketing funnel, what type of products they have shown interest in based on their SEM research, how many times to serve an ad to a user per day, etc. This is all able to be done with full knowledge of how that audience member has interacted with Display creatives via other Exchanges like Right Media and/or how they have interacted with other Search Engines like Bing.

It is extremely important to note this is all done with full regard to user privacy and using non-personally identifiable information. We would suggest that with any Display strategy, you should employ a level of sophistication to your marketing approach. However, if you really want to harness the power of the modern Display Marketplace and features like real-time bidding, audience targeting, third-party data, etc., then you have to utilize a robust technology platform and buy Display via AdX using a DSP.

Chris Jacob

4 comments
Omar Mohsen
Omar Mohsen

Thank you for this GREAT article :) Now i'll using GDN :) 

borislavstefanov
borislavstefanov

This is the first time I come across word transfer on the internet. The accessibility of this must be terrible.

Chris
Chris

Yes setting up on the GDN is quick and no cost beyond the media. This works well for a small budget and simple goal campaign. However if you are spending hundreds of thousands or millions of dollars a month on Display across multiple inventory sources,(i.e. Right Media, SSPs, etc.) then you need a scalable solution that can cross manage the media while achieving all the ROI and Business goals. This is where having a DSP accessing AdX is a must and where the benefit far outweighs any cost. Then assuming you have other digital channels like SEM and Social Media, a cross functional platform becomes even more desirable. Chris

Ron
Ron

What about in terms of costs of using GDN vs Adx. Signing up for GDN is a 15 min process before campaign creation. no budget minimums or setup fees. Does Adx initially cost the same? and will working through a DSP increase the campaign cost?