Ad Server

If you wonder how relevant ads appear on a page, the answer is an ad server takes care of this. Ad servers are an essential technology in digital advertising. They manage ad placement and delivery, enabling advertisers and publishers to enhance their ad strategies effectively.

What is an Ad Server?

An ad server is a software platform that centralizes the distribution of digital ad units. The system selects and serves the best ads for a given ad placement according to programmatic criteria. 

These platforms allow advertisers, publishers, and ad networks to distribute ads to different online channels, including websites, mobile apps, and video streams. Ad servers also track and report key metrics such as impressions, clicks, and conversions, helping optimize ad performance and campaign management. 

Why Are Ad Servers Important? 

Ad servers revolutionized digital advertising, simplifying the way web publishers commercialize digital ad space. An important function of ad servers is that of an auditing platform, thanks to their tracking and analysis of critical metrics. Thus, these platforms give organizations clear insights into their digital advertising performance and spending. 

Ad servers allow advertisers to optimize their campaigns, and publishers to optimize their inventory by selecting the ad that best adjusts to their set criteria. This function eliminates ad spending waste. 

How Does an Ad Server Work? 

Ad servers use a technology that makes it possible to insert ads into websites. At the center of any ad server is an ad decision engine. This software selects the optimal ad according to the criteria set by publishers and advertisers. These criteria and targeting rules may include targeting parameters, ad placement, ad format, priority, and pacing. 

Once the perfect ad is selected, the ad planning engine distributes the ad impressions evenly during a selected time frame or as specified by the advertiser. 

The process’s key steps are as follows: 

1. A user visits an application or website. 
2. The app or website’s page loads
3. The ad tag loads and the publisher’s ad server sends an ad request. 
4. The ad server analyzes the user’s available data and sends it to the advertiser-side ad server. 
5. The third-party server gives the publisher’s ad server the best ad for the slot. 
6. The selected ad is displayed on the website or app. 

Types of Ad Servers 

Ad servers can be used by publishers or by advertisers. These are called first-party and third-party ad servers. Let’s review each one: 

Publisher-side (First-party)

First-party ad servers help publishers manage their ad slots and sell their ad inventory on the interface. Publishers use ad servers to set up targeting criteria, for example, key-value targeting. With key-value targeting, publishers set specific attributes and conditions to select ads. Ad servers also allow publishers to set up location and device targeting. 

How Does a First-party Ad Server Work? 

A first-party server allows publishers to manage and deliver ads directly on their websites or apps. These servers don’t need third-party intermediaries and serve ads directly bought from publishers. The process is straightforwards, and here are the key steps: 

1. When a user visits a website, the browser sends a load request to the publisher’s web server to load the page’s contents. 
2. The ad server receives an ad request to fill the ad slot. 
3. The publisher’s ad server selects the best ad to win the slot and sends the ad code to the website. 

Advertiser-side (Third-party) 

Third-party ad servers are used by advertisers to track, analyze, and optimize their ad campaigns. It can store and manage ad creatives across multiple publishers. 

How Does a Third-Party Ad Server Work? 

Third-party ad servers manage the media buying for advertisers, centralizing the operations across publishers and ad networks in one place. It stores the information and runs the programmatic campaigns.

Third-party ad servers also manage and track campaign performance, setting up tracking parameters and allocating the ad budgets. One of their most useful features is that can run campaigns across multiple publishers using multiple ad formats. 

Hosted vs. Self-hosted Servers

When deciding between hosted and self-hosted ad servers, it’s essential to understand the differences between each option. 

Hosted ad servers are managed by a third party that handles the technical setup, maintenance, and support. This type of server is generally easier to implement since the hosting provider manages infrastructure, security updates, and troubleshooting. Hosted solutions are scalable, making them ideal for companies seeking flexibility and minimal IT involvement. 

However, hosted servers often come with monthly fees and offer less customization since they are standardized across users. 

Self-hosted ad servers, often open-source, give companies complete control as the server software is installed on their infrastructure. While this option can reduce ongoing costs, it requires significant technical knowledge and internal IT support. Self-hosted ad servers offer greater customization, allowing businesses to tailor the server to specific needs and integrate with other systems. 

Still, they also demand substantial setup and maintenance effort, which can lead to higher costs over time if issues arise.

How Ad Servers’ Performance is Measured?

Different event-driven metrics are used to measure an ad server’s performance. First-party ad server metrics and third-party ad server metrics can be different. 

Some metrics used to measure ad servers’ performance include: 

Ad requests.  The number of times a server is asked to deliver an ad when a user visits a webpage or app. Each request represents an opportunity to serve an ad impression, but not every request results in an ad being shown. 

Cost-per-click (CPC). In this revenue model, advertisers paid publishers when their ads get clicked.  

Click-through rate (CTR). The term CTR is the ratio of users who click on an ad to the number of total impressions it receives. 

Fill rate. Is the percentage of ad requests that are successfully filled with an ad, calculated as the number of ads served divided by the total number of ad requests. 

Discrepancy. The discrepancy occurs when there’s a difference between metrics recorded by different platforms, such as impressions, clicks, or conversions. This can happen due to various reasons, including tracking issues or differences in reporting standards. 

When is an Ad Server Used?

An ad server is used in various digital advertising environments to streamline ad management and delivery. In programmatic direct are bought directly from publishers at fixed prices. This system doesn’t use the auction process, although it still uses the ad server to manage ad delivery. 

In a private marketplace, (PMP), select advertisers participate in a closed auction for premium ad inventory, ensuring more control and exclusivity. In real-time bidding (RTB), ad servers facilitate auctions where ads are sold per impression in milliseconds, allowing advertisers to bid based on user data.