In simplest terms, an ad exchange is an online marketplace that allows advertisers and publishers to buy and sell ad inventory.
Once publishers add their impressions into the marketplace buyers then decide which impressions they wish to purchase using technologies like demand-side platforms.
This enables advertisers to quick buy ads across a range of websites instead of negotiating with each publisher. Although it is a more efficient way of buying ads a lot of questions have risen lately regarding the quality of the overall inventory of ad exchanges.
Originally published 01/22/18, updated 03/22/18.