Common Publisher Questions: Differences between AdSense and Ad Exchange

When speaking to publishers or people looking to better understand the ad optimization space, the most common questions I’m asked revolve around Google, mainly DFP, AdSense and Ad Exchange.

Those questions always include:

  • What’s the difference between AdSense and AdX?
  • What is dynamic allocation and how does it work?
  • Should I give 100% of my ad inventory to Google?
  • What’s the most effective way to use Google Ad Exchange?
  • Other ad partners have told me Google has an unfair advantage, is that true?
  • Is Google ripping me off?

These are all legitimate questions and your understanding of them will play a large role in your ability to maximize the value of your ad inventory. My aim with these posts is to take those commonly asked questions and answer them from our perspective, based on the experiences we’ve had with Google and other partners over the years.

If you’re unfamiliar with StudyBreak Media, my role or experience in the space, this will provide some insight. We’re not saying we have all the answers, we’re just hoping to share what we’ve learned.

I’d like to say upfront that while there are elements of Google’s ad setup I openly criticize and things they could do better, overall I believe they’ve done more than anyone to distinguish themselves as the leaders of the space and friends of the publisher.

Also, if you’re new to the space and find yourself confused with the meaning of any of the digital ad terms used, just jump back to our definitions glossary for reference or leave a question in the comments and we’ll get back to you.

What’s the difference between AdSense and AdX?

To many publishers, AdSense inventory has always had a negative stigma. We used to avoid AdSense entirely on our sites because we thought of the inventory as ugly text ads, created for Google search and converted to standard banners. They looked bad, paid even worse and generally reflected negatively on the quality of the sites they ran on.

The modern version of AdSense is different. While there are still text ads that run, there are both text and visual options for the ad creative. The main benefit of AdSense is the option for 100% fill rates (if ran without pricing floors) to almost any geo you have audience to fill.

If you use DFP as your ad server (we do), you can opt into automatic AdSense competition against the managed demand deals that you’re running when creating new ad units. The theory here is AdSense competes against the 3rd party network you’re trafficking in DFP and adds incremental value when they have an ad that will pay you more than your established rate.

As awesome as that sounds there are definite drawbacks. Unless you’re actively managing the line item price floors you’re setting within DFP (ideally daily) and very familiar with appropriate setup (line item types and differences), you could easily run into a scenario where you’re enabling AdSense to undercut a demand partner that could be paying you more for your inventory.

Google could do a much better job at making this clear to a publisher however, DFP does offer the option to opt-out/override automated AdSense competition which is the route we take 100% of the time.

Overall, it’s best to consider AdSense as a low tier, quality managed demand partner that offers a lot of flexibility with ad sizes and serving, 100% fill rates and almost unlimited inventory. Other benefits include fast and reliable payment (Net 30) and the comfort of working with a titan like Google vs. a much smaller shop that might default on payment.

Google AdX or Ad Exchange’s (AdX) setup is entirely different. AdX is a programmatic advertising market Google has created that blends with DFP and brings together buyers and sellers across the industry. AdX allows publishers to setup the equivalent of open auctions for their ad inventory and set the rates they would like that inventory sold at. Beyond the rates, the publisher also controls things like whether or not their inventory will be sold as branded or anonymous, and who can and can’t bid on that inventory.

When your inventory is sold via AdX, that doesn’t mean it was purchased by Google (although Google AdWords does buy quite a bit of inventory on AdX), it only means it was purchased by a demand partner who pays for a seat on Google’s Ad Exchange. It might help to think of AdX as a vehicle that enables buying/selling. Although Google does have a seat in that vehicle (AdWords, Invite Media) there are thousands of other buyers (DSP, Trading Desks and Brands) also bidding.

Unlike with AdSense, AdX shouldn’t be used as a 100% fill partner. At it’s most effective, AdX is used as a mechanism to compete aggressively against the performance rates set by the rest of your managed demand stack (other ad partners).  AdX prices should be set higher, and depending on performance much higher, than the established rates across your managed demand stack in order to create both auction pressure and to increase the value of your ad inventory.

In order to understand why that’s the case, it’s important to understand some of the differences (some would say unfair advantages, though more on that later) AdX has vs. other ad partners and ad exchanges. While AdX can be used as a stand-alone marketplace, it’s most effective as an integrated part of DFP.  In the next post, we’re going to cover the concept of dynamic allocation — What it means, what it is, how it’s used and how to use it more effectively.

19 Comments to Common Publisher Questions: Differences between AdSense and Ad Exchange

  1. I am already using adsense on my site, and signed up with an adnetwork that provides ad tags powered by AdX. Can I use adsense and AdX powered tags at the same time on the same site ?

  2. how do i setup adx to compete against another ad exchange line item in dfp? what line item type and settings should be used for both?
    Chris

  3. I don’t really understand how dynamic allocation is implemented. Is it a functionality of DFP that you can just “turn on” by line-item (like adsense competition)? Or is it something that you have to set up or structure in some way? Maybe another way to put this is that I don’t understand how to do what you are describing in the penultimate paragraph of this post.

    • Great question on what’s a simple setup but difficult to get started with. First, make sure to read this. This also might be straight forward but Google will walk you through setup once you’re setup on DFP and then hooked up with AdX. DA is a function of DFP and can be turned on for AdX users. Essentially it allows publishers who are on the AdX exchange to allow AdX to compete against non-guaranteed unsold inventory at prices set for eligible line items in DFP. You turn it on by flighting your unsold inventory (your ad partners) through line items that allow for the competition (price priority being the best example imo). What I’m describing in that 2nd to last paragraph is using AdX to compete against the average rates being returned by 3rd party partners, which you’re defining in the price priority line items you’re using to run those partners in DFP. To keep this response from being pages and pages long I will try to simplify it as much as I can: To do this you’d need to be connected to AdX and have created AdX ad units in AdX that are linked to DFP as ‘Ad Exchange’ ad types. Google can link your DFP and AdX accounts to make this possible. From there you would need to assign those Ad Exchange line item types to DFP ad units where your 3rd party partners run. This is what allows for the competition. AdX is then given priority to ‘steal a bid’ (step in and serve one of their ads) in place of your 3rd party ad partner. What I’m describing is inflating the rates you’re charging for your line item prices (or actually getting better rates is an ideal situation) to make AdX work hard to steal the bid and therefore increasing your CPM rate from AdX and hopefully overall revenue/performance. The ideal scenario is where you’re OK setting a very high AdX floor because you’re fine if they pass on the inventory and you let your other partners fill it (because they are also performing well). In general this is one of the more complex aspects of setup and unfortunately is much easier to show vs. tell.

  4. Hello

    We recently contact by AD exchange partners and they get approval from google for our website to use Google Adx (Ad Exchange) as publisher to generate revenue. and they told they will send us tags to put on our wbsite like google adsense

    1. How i can confirm my site approved by google adx or not
    2. In future if i am not happy with partner and want to switch to another partner then will need to send my site again for approval or i can switch to another partner without getting direct approval
    3. If now my site approved by adx then can i not use google adx directly like my adsense account by having my adx account? If ye then how

  5. Hi,
    The Google Adsense is a very good way to monetize a blog/website. It is very important for new bloggers to learn importance and if and buts of the Google adsense.

    This article is having a quality of learning, nice work.

    Thanks for sharing information, which is not known to many.
    sunil

  6. The given information is ok . But i want to know in detail why we use adexchange lines or tags in dfp as we need to use adexchange tags in separate order even dfp serves adsense by default.

    Means why we need to make separate order of Ad exchange in dfp even all adesense r already enabled.

    Please solve my confusion.

    thanks
    Reshma

    • Hey Reshma. I’d love to help you but I’m not sure I understand the question. Are you asking why AdExchange line items are necessary if you’re already working with AdSense dynamically? AdSense is, well, AdSense and the AdExchange line items enable Google AdX for dynamic allocation. If I’m missing your question, please elaborate. Thanks for reading.

      • @Emry ~ “Invite only” ~ man… I’ve spent days trying to find out what it takes to get in to AdX… I’m planning an ad spaced startup and preemptively wanted to be in the position to market inventory… You’re the first one to state what I’ve been suspecting…

  7. Hi,

    I just can’t see the clear difference between adx and DFP.
    As you have mentioned “While AdX can be used as a stand-alone marketplace, it’s most effective as an integrated part of DFP”, but I can’t find website of AdX alone, the only source is https://www.google.com/dfp/.
    Is there any website of AdX?

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