The Advertisers are the customers of the Ad Networks who are looking for traffic. They sign up to the network because it is easier to find and connect with companies who are willing to sell traffic this way. This is easier than connecting with every website/network individually.

Ad Networks work as traffic brokers/intermediaries which connect the two parties with each other. In other words, they serve as  platforms where publishers can sell and monetize their traffic by allowing advertisers to bid on their ad spots.

The Publishers in the network who have ad spots available on their website, on which the advertisers looking for traffic can make bids, so that their ads will shown in those spots. The publishers can set minimum prices for these ad spots to show.

In most cases, these publishers will sell their traffic on a CPM basis (cost per mille), which means the advertisers will be paying a certain amount for every 1000 impressions their ads obtain on the publishers’ site. In the adult business, these prices usually range between 1$ up to 10$ per thousand impressions. Advertisers will often be bidding and competing for these ad spots.

Publishers also have the ability to set a minimum bid price. If the minimum bid price is set too high, there may not be enough people willing to pay for the impressions/traffic from a specific spot. This means the publisher is not monetizing the spot optimally.
If the minimum bid price is set too low, there may be a higher demand for the spots, but the prices paid may be below what Advertisers are actually willing to pay for that traffic. Because of this, the eventual CPM may be lower than what it could have been.

Obviously, the main objective of a publisher is to sell it’s traffic at a higher price than than what they paid to obtain it. The publisher must also check what prices advertisers are generally paying. The advertisers, need to make sure they not only choose the right traffic sources, but also not to pay too high amounts for the traffic they buy.

Some of the biggest and most successful Ad Networks are Exoclick, Ero-Advertising, Juicy-Ads, Traffic Junky etc. You will find some of the best Advertising Networks here.

There is a lot more to know about Adult Ad Networks, but this is the simple explanation for the beginners among you who are in the dark about the whole topic.