An ad exchange is a platform that allows advertisers and publishers to buy and sell advertising inventory in real-time. Ad exchanges are typically used in the context of programmatic advertising, which is the automated buying and selling of advertising space using algorithms and technology.

Ad exchanges provide a central marketplace where advertisers and publishers can connect and transact directly with each other. Advertisers can bid on available ad inventory in real-time, and publishers can set the terms and conditions under which they are willing to sell their ad space. This process is known as real-time bidding (RTB).

Ad exchanges use algorithms to match advertisers with the right publishers and to optimize the delivery of ads based on factors such as location, demographic information, and the type of device being used. RTB allows for a more efficient and effective advertising process, as it enables advertisers to bid on available ad inventory in real-time and allows publishers to maximize the value of their ad space.

Overall, ad exchanges play a crucial role in the programmatic advertising ecosystem by providing advertisers and publishers with the tools and data they need to run successful ad campaigns in real-time.