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.