An ad exchange is a digital marketplace where advertisers and publishers buy and sell advertising space in real-time. It connects various parties, including advertisers looking to promote their products and publishers wanting to monetize their websites. Through automated bidding processes, ad exchanges facilitate transactions that help optimize ad placements based on audience targeting and performance metrics. These platforms operate on a supply-and-demand model, allowing multiple advertisers to bid for ad space on a publisher's site. This competition helps ensure that publishers receive the best possible price for their inventory while advertisers can reach their desired audience efficiently.