What is an Ad Server and How does it Work?

In modern-day advertising, the ad tech ecosystem encompasses a range of technologies, platforms, and tools that enable advertisers and publishers to create, manage, and optimize their digital advertising campaigns. Ad servers are one such technology that provides the precision needed to generate quantitative results in advertising.

The shift towards direct-sold placements has been driven more by a desire among advertisers for greater control over their ad placements, better visibility into where their ads are appearing, and more direct relationships with publishers. 

However, ad servers have been instrumental in enabling this shift by providing a centralized platform for managing and delivering direct-sold placements. Through the use of server-side ad requests, ad servers make it possible to deliver ads directly to publishers’ websites or digital platforms, making direct-sold placements more scalable and easier to manage.

What is an ad server?

An ad server is both a technology and a platform. At its core, an ad server is a piece of software that is designed to manage and deliver digital advertising campaigns. The software runs on servers and is typically accessed through a web-based interface, allowing advertisers and publishers to create, manage, and track their digital ad campaigns.

However, an ad server is also an ad tech platform, in the sense that it provides a centralized place for managing and delivering ads across multiple channels and platforms. Advertisers and publishers can use ad servers to manage campaigns across multiple websites, mobile apps, and other digital platforms, using a range of ad formats and targeting options. It is essential for: 

  • Media planning
  • Verification
  • Targeting
  • Tracking
  • Reporting

Ad Networks vs Ad Servers- What is the difference?

Ad servers and ad networks are two distinct components of the digital advertising ecosystem. While they may be related, they serve different functions and should not be confused with each other.

An ad server is a technology that is responsible for managing and delivering digital advertising campaigns. Ad servers can be used by a variety of different entities, including advertisers, publishers, and ad networks.

On the other hand, an ad network is a programmatic platform that connects advertisers with publishers, enabling them to buy and sell advertising inventory across a network of websites, mobile apps, and other digital channels. 

To summarize, Ad servers are responsible for the actual delivery of ads, while ad networks are responsible for connecting advertisers with publishers and providing tools for optimizing campaigns.

Role of ad servers in the demand-side platform (DSP) and supply-side platform (SSP)

Ad servers in programmatic advertising work in integration with other programmatic platforms to facilitate ad delivery and optimization. While ad servers can operate independently to serve ads on websites or within apps, their full potential is realized when integrated with other platforms such as DSPs and SSPs

How does an ad server work in a DSP?

  1. Ad Request: The process begins when a user visits a website or app that has ad space available for auction. The website or app sends an ad request to the DSP.
  1. Targeting and Decision Making: The DSP’s ad server receives the ad request and evaluates various factors, such as user data, contextual information, and targeting criteria set by the advertiser. Based on this information, the ad server determines if there is a relevant ad to be served.
  1. Bid Request: If the ad server identifies a suitable ad, it generates a bid request. This bid request contains information about the user, the ad placement, and targeting details. The bid request is then sent to multiple ad exchanges or SSPs.
  1. Real-Time Bidding (RTB): Ad exchanges and SSPs receive the bid request and conduct an auction among interested advertisers. The DSP’s ad server participates in the auction by submitting bids in real-time.
  1. Winning the Auction: If the DSP’s bid is the highest, its ad server wins the auction. The ad server is then notified of the win and proceeds to deliver the creative assets to the publisher’s ad server.
  1. Ad Delivery: The DSP’s ad server sends the creative assets to the publisher’s ad server, which in turn delivers the ad to the user’s device for display.
  2. Tracking and Measurement: Throughout the ad campaign, the ad server tracks impressions, clicks, conversions, and other key metrics associated with the delivered ads. This data is used for performance analysis, optimization, and reporting.

How does an ad server work in an SSP?

  1. Ad Request: When a user visits a publisher’s website or app, the publisher’s ad server generates an ad request for the available ad space.
  1. Inventory Evaluation: The SSP’s ad server receives the ad request and evaluates the available inventory based on factors like ad format, placement, and targeting criteria.
  1. Demand Evaluation: The ad server checks with connected DSPs to determine if there are any relevant ads from advertisers bidding on the available inventory.
  1. Ad Selection: If there are suitable ads from DSPs, the ad server selects the most relevant and highest-paying ad to be served to the user.
  1. Ad Delivery: The SSP’s ad server sends the creative assets of the selected ad to the publisher’s ad server, which delivers the ad to the user’s device.
  1. Tracking and Reporting: The ad server tracks impressions, clicks, and other important metrics associated with the delivered ads. This data is recorded for reporting purposes and to provide publishers with insights into the performance of their inventory.

What are the types of ad servers?

There are two types of ad servers: first-party ad servers and third-party ad servers. There is not much difference between the two types of ad servers from a technological point of view. What distinguishes the two are their respective purposes. 

First-party ad server

A first-party ad server helps publishers to manage and display ad slots that are sold to advertisers through direct campaigns. Hence, this type of ad server is also called a publisher’s ad server. First-party ad server offers internal end-to-end services to advertisers with respect to targeting, managing, and running ads. 

Publisher’s ad servers provide publishers with greater control over their ad campaigns as access advertiser parameters, including the target audience and payment model, to determine the appropriate ads to display from their available inventory.

How does a first-party ad server work?

The functioning of the first-party ad server is an interaction between the publisher’s website and its ad server. Here are the steps involved in running an ad using a first-party ad server. 

  1. As a user visits the publisher’s website, the browser sends a request to the server asking for the page content i,e the HTML. 
  2. The publisher’s server returns the HTML and the page content begins to render.
  3. Post the content is displayed, a request is sent to the page’s ad server asking it to fill the available ad slot.
  4. Based on the advertiser’s stored information and submitted parameters, the publisher’s server chooses a relevant ad campaign. 
  5. The ad server now sends back an ad to the website and the ad is displayed. 

Third-party ad server

Third-party ad server is also known as the demand side ad server as it is meant for advertisers. As the name states, the third-party ad servers are not the direct owners of the websites on which the display ads are showcased. 

These servers are used by advertisers to run their ads and manage and optimize their campaigns. They also give detailed reports that are inclusive of ad engagements and click-throughs. 

How does a third-party ad server work?

Third-party servers used by advertisers work in coordination with the first-party servers i.e the internal servers used by the publishers. The tasks performed by the third-party ad servers are partially similar to that of the first-party ad servers. Here’s how third-party ad servers work. 

  1. As the user visits a publisher’s website and its browser send a request to the server asking for page content i.e HTML. 
  2. The publisher’s server returns the HTML and the page content begins to render.
  3. As the content is loaded, the publisher’s server receives a request to select an ad slot on the page.
  4. Based on the advertiser’s targeting information, the publisher’s server chooses a relevant ad campaign. 
  5. The third-party ad tag on the publisher’s website sends a request to the third-party ad server used by the advertiser.
  6. The advertiser’s ad server sends back an ad to the publisher’s website and the ad is displayed. 

To summarize, the only difference between the first-party and third-party ad servers is that in the former the publisher’s server performs all the tasks. Whereas in the case of the latter, the publisher’s ad server simply sends requests to the third-party ad server, and then the ad is displayed. 

How to choose the best ad server for publishers
  1. Outline advertising or revenue goals

When selecting an ad server, publishers first need to identify their advertising goals, serving needs or features, and budget. It’s essential to evaluate whether the ad server’s capabilities and services align with the goals and timeline of the defined goals. It’s also important to determine whether the ad server caters to the preferred niche or target audience with respect to geography, demography, and interests. 

  1. Real-time analytics

By monitoring ad performance in real-time, publishers can gain insights into the effectiveness of their advertising campaigns. This allows them to evaluate the success of their campaigns and identify any areas for improvement immediately. 

Additionally, real-time analytical reporting from ad servers on ad performance combined with GA4 reports on content performance allows publishers to make data-driven decisions based on quantitative results. Overall, being able to track ad performance is critical for maximizing the effectiveness and efficiency of advertising campaigns.

  1. Efficiency

Publishers must choose ad servers that prioritize efficiency and responsiveness in delivering accurate and relevant inventories that align with their ad formats and given parameters. Additionally, publishers should consider ad servers that support a variety of ad formats, which will allow them to explore different options and identify which ad formats work best for their audience.

Moreover, ad servers that can adapt quickly to changing market trends and user preferences are essential for publishers to remain competitive in the digital advertising landscape.

  1. Payment model 

Publishers should consider the payment model and advertising approach used by ad servers before selecting one to work with. The payment model can significantly impact the revenue and expenses of the publisher, so it is crucial to understand how the ad server charges for ad impressions or clicks. 

Additionally, different ad servers may specialize in different types of advertising formats, such as display ads, native ads, or video ads. Therefore, it is important for publishers to choose an ad server that offers the types of ads that align with their business goals and audience preferences.

  1. Type of ad server

Aside from the first-party and third-party ad servers, there is the third kind to choose from- the one that caters to both advertisers and publishers. Content creators must also check if the ad server specializes in:  

  1. Any type of ad inventory
  2. Ad formats 
  3. Niches or interests
  4. Contextual targeting 
  1. Customer service

For those new to ad servers, it can be challenging to comprehend their operations, especially since they continuously advance, improve, and update. Therefore, it is advisable to opt for an ad server that has a dedicated customer service team that offers 24/7 online assistance, telecommunications services, or even demo sessions. The effectiveness of their response to the queries and the level of support they provide are crucial factors to consider.

Ad servers have revolutionized the way publishers manage their ad inventory and are essential tools for publishers looking to stay ahead in an ever-changing ad tech ecosystem. In the near future, they are likely to play an even more significant role in enabling publishers to navigate the complexities of programmatic advertising and maintain a competitive edge. 

With the integration of new technologies like artificial intelligence and machine learning, ad servers will become more sophisticated, allowing publishers to leverage data insights to optimize ad performance and deliver more relevant and engaging ads to their audience. 

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