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I've been thinking of putting ads on my blog and wondered how do ad exchanges make money? Also, I was curious about what an ad exchange does and how it's different than an ad network. Ad exchanges make money through a fee for each transaction. These fees are usually less than an ad network. Keep reading and I'll share the pros and cons of using an ad exchange on your blog. Plus, whether you should use an ad network or ad exchange, the difference, and the best ways to monetize a website. What is an Ad Exchange? An ad exchange is a marketplace, advertisers are matched with content creators (I'll call them publishers to keep things simple.) Advertisers are buying the ad space and publishers and selling space on their website. An ad exchange is a middle person that helps make the deal happen. It's very similar to a real estate agent that connects home sellers to home buyers. The buying and selling of ad space use a bidding process. If someone is buying ad space they can set a floor price the lowest they will pay for an impression. They can also set a ceiling price, which is the highest price they will pay for it. An impression is just when someone views an ad. It doesn't account for clicks or sales. Also, both publishers and advertisers can set rules or criteria. Due to these criteria, some advertising space gets unused. When it comes to the fees an ad exchange is going to have fewer fees than an ad network. Google Ad Exchange (the largest player) has a fee of around 5% to 10% per transaction. If you compare that to Google Ads (the Ad network) the fee is going to be around 20%. Some other popular ad exchanges are... RubiconAppNexusOpen XSmaatoVerizonPubmaticSmartyads The challenge is some ad exchanges are not very transparent with their fees. Rubicon another popular ad exchange was charging publishers 10-20%. This is on top of the fees they were charging advertisers and exactly how Rubicon calculates its fees are a mystery. You can read more about this story from this link HERE. You might be wondering how an ad exchange is different than an ad network. Ad Exchange vs. Ad Network An ad exchange and ad network are very similar. They both allow publishers (content creators) to connect with advertisers. The publisher wants to make money by displaying ads and the advertiser wants to spend money to show ads. The main difference is with an ad network the middle person buys all the inventory and sells it to the publisher and includes MORE fees. With an Ad Network say it's Google they just install a website and the advertisers and publishers set their prices and terms. Most importantly there are fewer fees (usually). Another very large difference is technical knowledge. If you own a website it's easy to get on an ad network and start to show ads. The ad network helps you and makes it as easy as possible. With an ad exchange you're on your own and it' requires more technical knowledge and it's HARDER. The third HUGE difference is it's more difficult to get on an ad exchange. (usually) With Google Ad Exchange a website needs to have a minimum of 5 million monthly page views. If you compare that to Google Ads (Google ad Network) there are NO pageview requirements. The only way to get into Google Adx (Google Ad Exchange) is with a special invite. Yea, it's like a secret club. Oh, and there is one more BIG difference. An ad exchange is going to pay much more money usually. The reason why is because the advertisers are spending more money. Think of it as a billboard in the most popular street on Beverly Hills, CA compared to the ghetto in a desert town. The billboard in Beverly Hills is going to be more expensive. How to Monetize a Website with Ads? At this point, you're wondering how to make the "most" money from ads right? Your first option is to choose Google Ads (Google Ad Network). It's easy to set up and there are no visitor requirements. The bad news is you're not going to make a lot of money. Expect to earn from 0 - $4 per 1,000 page views. Google ads also have an option where they can put ads anywhere they want on your website. You don't want this because it can slow down your website "a lot". This can hurt your user experience and rankings. The best thing to do is just pass on Google ads. It's better to wait until you have 1,000 - 5,000 page views per month to start putting ads on a website. At 5,000 page views, you can join a much better ad network called Ezoic. The earnings do increase and you can expect to earn $7 to $80 per 1,000 page views. More good news is the company has a plugin that helps your website with speed. Speed is important for rankings and user experience. The requirement is that you do need to have 5,000 monthly page views on your website. Ezoic can accept a website that earns 1,000 page views a month but there is a requirement for this. Yea, you have to be going to school, so they know they can trust you. I would recommend starting HERE. Apart from Ezoic other ad networks that are MUCH better than Google Ads are Mediavine and Adthrive. Other Ways to Monetize a Blog The next way to monetize a blog is by creating a product and then selling it to your audience. The downfall of this is “it's a lot of work to create a product.” If you do have a large audience on a niche, this is an option. Another idea is to use other people's products and this is called affiliate marketing. I've made some great money with this type of marketing and this was before a website. Having a website does help, but if you own any social media account you can earn with affiliate marketing. How this business model works is when you refer a visitor to a website and if the visitor makes a purchase you earn a percentage of it. The interesting thing about affiliate marketing is near “all” business's have some type of affiliate program. This means that regardless of what niche you're in you can earn money. Even better news is you can earn “more” money as an affiliate. There are a few affiliate programs where you can earn over $1,000 per sale. How many website visitors do you need to earn $1,000 from ads? With affiliate marketing, you can earn the same type of money usually with less traffic. The bad news is the learning curve can be higher. Many ad networks make it easy to put ads on your website. Once you post the ads then the income can be somewhat passive. With affiliate marketing, you could post affiliate links on your website. If you want to earn more then it usually requires an autoresponder. An autoresponder sends out emails automatically. These emails are then used to market various products and services. It helps to know what you're doing. The only way to learn this is by being humble and finding someone who is very good at this. There is only 1 person I recommend to learn how to do affiliate marketing. He isn't the best at blogging, but he is VERY good at converting traffic to money. Since, seeing "some" money helps "a lot" I do think this is a great place to start. Having a blog is "more Long-term" because a blog post usually takes 6-10 months before getting the most traffic. If you want to learn more about this method of affiliate marketing then click on the link right HERE. I hope this blog post on how do ad exchanges make money was helpful to you. Bye for now.