What is an Ad Server? How does Ad Serving Work?

Adtech is much more than a simple trade between publishers and advertisers. If you are a part of the ad tech ecosystem, you know that an online advertising ecosystem is complex. It involves many parties, such as supply-side platforms(SSPs), demand-side platforms(DSPs), and ad marketplace. All of these complexities to achieve a single objective- displaying impactful online ads in less than a thousand milliseconds, flawlessly! In this massive digital advertising landscape, the ad server eventually does all the job behind the scenes. Most popular ad tech platforms, programmatically powered ad networks, and ad exchanges rely on these ad servers.

In this detailed guide, we will discuss what an ad server is, the types of ad servers, how ad serving works, and all the concepts related to ad server in detail.

Without further ado, let’s begin with understanding-

What is an Ad Server?

Ad servers are web-based technological systems that host, optimize, and distribute ad content across various apps, websites, and social media platforms. Such servers are also referred to as ad-tracking systems or campaign management platforms.

Ad servers can be considered as large containers of raw creative graphics. When users visit a web page or app, an ad creative is retrieved and served in the advertising slot. The new-age advanced ad servers also act as an interface with end-to-end ad management solutions. These let you set delivery parameters, target and monitor campaigns with advanced algorithms and analytics, and gather massive amounts of data.

What is Ad Serving?

An ad-serving platform is the core element of every ad server. It is an ad tech process of delivering advertisements on various websites, apps, and social media platforms via ad tech software. In this process, the most relevant ads are selected for display using complex algorithms and advanced decision-making tools.

The ad selection process is strictly regulated by the guidelines established by advertisers and publishers, and the criteria set in the ad server itself. Such guidelines include settings for targeting criteria, digital ad formats, ad priority, ad placement, ad viewing frequency, earning potential, and more. Ad servers are also used for ad tracking, management, reporting, and billing.

Classification of Ad Servers

The classification of video ad servers can be made according to the users and the relevant usages, such as:

• Publishers(First-party Ad Servers): Publishers are typically referred to as “first-party ad servers” or “sell-side technologies.” This is because they are the closest party to users as owners of digital properties on which ads are served. First-party servers assist publishers in ensuring inventory control, management of ad placement, ad delivery optimization, and statistics delivery.
• Advertisers(Third-party Ad Servers): Advertisers are referred to as” third-party ad servers” or “buy side technologies” since they do not interact with publishers directly while their server interacts with publisher-owned websites. Third-party servers assist advertisers in rendering and optimizing their ad creatives across all campaigns.
• Ad Agencies: These are the teams that operate demand-side platforms(DSPs) on behalf of the advertisers.
• Ad Networks: These are the platforms that help publishers in promoting and selling their ad spaces.

Considering management and localization, video ad servers can be further classified into:

Self-hosted and Hosted/ Managed Ad Servers:

Self-Hosted Ad Servers

Self-hosted servers are installed and maintained by their owners. The main advantage of self-hosted ad servers is that the ad-serving technology is available for free or for a small one-time fee. However, it is the publisher’s responsibility to maintain and troubleshoot such servers. Since the scripts of self-served servers can be modified and customized at any time, they have broader functionalities.

Nonetheless, supporting stable and seamless functions requires considerable human resources, constant maintenance, and monitoring.

Managed Ad Server

A managed video ad server is hosted by an ad-serving company or third-party vendors. Moreover, it does not require any special technical knowledge for operation. This is basically a SaaS technology that you “rent” by paying a monthly/yearly fee for access.

Local and Remote Ad Servers

An ad server can be run either locally or remotely. You can have direct physical access to a local ad server if you have one. If not, you can consider using the capabilities of a third-party company that provides remote server access.
Publishers typically own local servers, whereas multiple publishers can leverage remote ad servers as they are managed and operated independently. In such scenarios, all ads are broadcasted from a single source, allowing advertisers to track their ad placement across the Internet.

Are DSPs and SSPs types of Ad Servers?

In ad tech, the terms “demand-side platform” (DSP) and “supply-side platform” (SSP) is frequently used interchangeably with “ad server.” However, DSPs, SSPs, and ad servers are not the same things.
Nevertheless, DSPs and SSPs are frequently involved in the communication process between first and third-party servers. Consider a DSP to be an interface that allows you to manage an ad campaign across various ad servers. You can also consider supply-side platforms to be similar interfaces for publishers and their ad inventory.

Let’s now distinctively understand DSPs and SSPs!

What is a DSP?

DSP, or “Demand-Side Platform,” is an ad tech tool used by advertisers in marketing and advertising. It acts as an interface that connects advertisers with the programmatic advertising ecosystem. It also helps them manage purchasing advertising media from the ecosystem.

Features of DSPs that advertisers leverage:

• Monitor ad performance
• Perform real-time bidding (RTB) on available ad inventory from publishers
• Define target audience
• Regulate frequency capping
• Set a budget for ad campaigns
• Access and purchase exclusive inventory from DSP service provider partners

What is an SSP?

SSP or “Supply Side Platform” or “Sell Side Platform” refers to an ad tech tool used by publishers in marketing and advertising. It connects publishers to the programmatic advertising ecosystem and manages how they sell their ad inventory through that ecosystem.

Features of SSPs that publishers leverage:

• Define guidelines for selection criteria of types of advertisers that are permitted to bid on ad inventory
• Display their available ad inventory to relevant advertisers
• Sell their available ad space impressions automatically to the highest-bidding advertisers.
• Make guaranteed deals and other fundamental contract agreements with preferred advertisers.
• Configure multiple options, such as price floors (minimum buy prices), to maximize revenue
• Manage a wide range of other aspects of their advertising inventory from a single interface

As we discussed earlier, ad servers store ad creatives, serve selected ads automatically to visitors as per defined rules, and collect user interaction data such as impressions and clicks.

The capabilities of a video ad server remain the same regardless of who uses it. While publishers use them for managing ad inventories and reporting, advertisers generally use these servers to manage ad campaign creatives.

Overall, usage of ad servers by both parties involves an advertising transaction wherein publishers sell available ad inventory to the advertiser directly, by complying to a mutually defined set of terms and conditions.

While such a direct deal is established, the publisher’s (first-party) ad server directly interacts with the advertiser’s (third-party) ad server to deliver advertiser’s ads to users visiting the publisher’s website.

Despite having similar capabilities, publisher’s and advertiser’s ad servers have different functions.

Now let’s dive deeper into how these servers work individually.

What is a Publisher Ad Server?

These servers, also known as “first-party ad servers,” help media sellers enhance the value of every impression. They optimize yield by serving the highest-paying advertisements to viewers across their personal domain. Publishers use such servers to determine the most relevant viewers for each impression. They also track how users interact with ads (whether they click or skip them), evaluate the ad display frequency, and monitor overall performance.

Publishers also use sell-side first-party ad servers to display ad creatives with varying technical and targeting requirements across multiple formats. The ad-serving interface enables digital media sellers to add new ad buyers to their contact lists easily. It also lets sellers edit, manage, and delete partners efficiently.

Publishers can also collect independent reports on ad creatives, explore the best-performing ad formats, and optimize their ad space over time.

Functions of publisher ad servers (first-party ad server):

• Enhance the value of ad inventory and optimize ad impressions.
• Control how viewers interact with various cross-platform ad units such as mobile ads, video ads, banner ads, and rich media ads.
• Provide in-depth information about ad inventory and revenue generation
• Gather statistics on the number of impressions and clicks, evaluate performance using relevant metrics, and provide attribution (per day/week/month)

What is an advertiser ad server?

These servers, also called “third-party ad servers,” help advertisers save time and costs by storing and managing the ad code. Marketers are only required to download ad units to third-party ad servers once. They can modify the downloaded units anytime without sending the updated copies to each trading partner.

Alternatively, the latest versions of the advertisers’ creatives assist advertisers in getting access using the HTML link tag, which eventually leads to the server. Top video ad servers even provide separate reports on performances, spending, and revenue of every ad to advertisers.

Third-party ad servers (buy-side) are built considering the media buyer’s logic. They help advertisers to maximize profits, reduce costs, and centralize the ad-buying process across publishers. Advertisers can also use these servers to track metrics like impressions, clicks, conversions, and purchases.

Functions of advertiser ad servers (third-party ad server)

• Ad code storage and management
• Configuration of tracking metrics for advertising campaigns
• Monitoring the effectiveness of advertising campaigns (number of impressions, clicks, and actions)
• Evaluating the reach of ad campaigns
• Correlating and comparing data with publishers’ reports
• Optimization of various ad campaigns

How do first and third-party ad servers work conceptually?

Step 1) Ad-serving technology is complex and involves multiple steps. It all begins with a user’s visit to an app or website. An IP connection is then established between the user’s computer and the publisher’s web server. As the website starts loading, ad tags on the site load and call the sell-side ad server.

Step 2) On receiving the ad request, publisher’s ad server immediately analyzes user data such as time of day, language, online behavior, geolocation, and demographic attributes (age, gender, employment, marital status, etc.). The data management platform can also transmit such information.

Step 3) The ad server then sends requests to ad exchanges, where buyers proceed to bid incase they are interested in the ad space and consider it relevant to the user.

Step 4) This server also analyzes the number of times the ad has been displayed to the specific user in the past. This is referred to as frequency capping. If the advertisement is displayed very frequently, it is rejected.

Step 5) A publisher ad server processes millions of buyer requests and selects the best-paying ad in milliseconds. It then redirects the browser to the marketer’s ad server, which retrieves the ad creative from the CDN (content delivery network).

Step 6) Finally, the advertisement is retrieved and downloaded successfully onto the web page, which is referred to as an impression. The user’s browser streamlines the entire online advertising process, right from ad selection and placement, regardless of the number of calls. This must take less than a second to ensure high viewability.

This was the fundamental concept of how ad servers organize the advertising process.

Now let’s understand how the ad serving process takes place on the publisher (first-party ad server) and advertiser(third-party ad server) sides.

How ad serving works when a standalone first-party ad server is involved?

The process of managing ad calls is very simple in standalone first-party ad servers.

When the first-party ad server receives the ad call:

1. The server processes existing user information
2. It chooses an active campaign and ad creative based on this information.
3. The ad creative is then sent to the user’s browser as a JavaScript tag, which displays the ad.

The ad creative is directly stored on the first-party ad servers in this configuration. However, even in direct deal arrangements, publishers do not commonly store advertisers’ creatives on their own video ad servers. Instead, third-party servers host the ad creatives that advertisers want to use.

How does ad serving work with third-party ad servers?

The process is similar to that of a standalone first-party ad server but with a few additional steps:

1. The first-party server processes existing information about the user
2. It then chooses an active ad campaign based on the retrieved user information.
3. The ad markup of the campaign is delivered to the specified ad slot on the web page by the first-party ad server. This code contains a URL that makes an ad call to a third-party server.
4. Upon receiving the forwarded ad call, the third-party ad server chooses an ad creative to serve the website based on existing user information.
5. The third-party ad server sends the selected creative back to the publisher’s website as a JavaScript tag, where the ad is finally displayed to the user.

How does ad serving work with DSPs and SSPs?

The process of ad serving work when SSPs and DSPs are involved is as follows:

1. The first-party ad server processes existing information about the user
2. The ad server sends a code fragment to the web browser that includes a URL directing to the SSP, along with updating the ad tag with the user’s information.
3. The web browser sends the ad call to the SSP, initiating a bid request.
4. The bid request is distributed to various advertising demand sources, including DSPs.
5. Each demand source conducts an internal RTB auction based on the existing user information to finalize the best bid for the available inventory.
6. After completing all auctions, the highest bids are submitted to the SSP for review.
7. The SSP chooses the winning bid and delivers it to the web browser as a code fragment.
8. The browser reads the code and sends a signal directly to the winning demand source.
9. The winning demand source chooses the ad to be displayed, returning to the web browser another code fragment containing a URL that directs to the third-party ad server.
10. The third-party server of the winning bidder returns the actual ad creative file to the browser, which is then displayed to the user.

This entire process is completed in milliseconds, usually before a page loads.

Features of an Ad Server

Most ad servers provide a combination of ad delivery and ad management features to advertisers, publishers, and ad networks. Others offer limited features. When selecting an ad server, ensure that it has the following features:

• Supports ad creative upload: The ad server must support all standard creative sizes and interactive advertising bureau(IAB) formats, including text, image, video, audio, rich media, games, animation, interactive, native, in-app, mobile, and others.
• Campaign scheduling: The server should enable you to determine the dates on which the ad campaign has to run.
• Auto-optimization: It should select the best-performing ads and serve more of them.
• Technical targeting: The video ad server must deliver ads to the web, tablet, mobile, or television screens. It should also support targeting across multiple operating systems.
• Speed of delivery: The ad server you choose must determine the frequency at which the ad impressions are delivered. It should also support location-based targeting by country, state, metro area, city, and language.
• Time targeting: Ads must be scheduled to appear at a specific time of day when users are most active. Targeting is based on social and demographic factors such as age, gender, language, nationality, income, employment status, and more.
• Behavioral targeting: Target users based on their online behavior, search history, interests, and more.
• Retargeting: The server you shortlist must analyze previous user engagement with the brand. It should display relevant online ads to drive more attention and trigger more engagement, like clicking, subscribing, and purchasing.
• Creative sequencing: Your ad server should enable you to specify the order in which ads appear, typically under the same creative concept.
• SEO: Your shortlisted ad server should have the capability of keyword bidding and ensure ads appear on the results pages of search engines.
• Frequency capping: Ensure that your selected server lets you set limits on the number of impressions per hour, day or define a specified period for online ad serving.
• Ad tracking: It should monitor whether the creative content generates the desired outcomes and ensures proper ad traffic. The ad server must also ensure that the advertising content is displayed to the intended demographics at the appropriate time.
• Reporting: Check if the ad server you choose has features like real-time, dashboard, custom reports, notification alerts, and granular reports on clicks, costs, impressions, ROI, and eCPI.

How do you choose an ad server?

To begin, you must evaluate which tasks require the use of an ad server for your business. First and third-party servers are basically the same component of technology. However, different needs and challenges of the demand and supply sides make publishers and advertisers use them differently. Once your core tasks are defined, you can choose the ad-serving platform that performs such functions and caters to your overall business needs.

Factors that you need to consider while selecting an ad server:

• Managed or Self-hosted Ad Servers

All ad servers can be technically classified as self-hosted and managed. Both of these definitely can be integrated and function together.

However, if the technology provider maintains a managed ad server, the configuration and maintenance of the self-hosted ad server are all on you.

A self-hosted ad server can be a cost-effective approach if you have a hands-on team with the right expertise in ad-serving technology. Alternatively, it is always recommended to choose a managed ad server as the technology providers always have skilled and experienced professionals who handle the end-to-end ad serving process.

Managed vs. Self-hosted Ad Servers

1.1. Managed Ad Server

1.2. Self-Hosted Ad Server

2. Efficiency

An ad server must be highly efficient to grab users’ attention. Choose an ad server that can deliver inventory accurately and quickly with minimal disruptions. Regarding efficiency, processing power and versatility are also crucial factors.

Pick an ad server that will offer you a variety of ad formats to choose from and serve them across multiple platforms. These ads should also be customizable so that they can be adapted to different screen sizes.

3. Scalability

Select a scalable ad server that can handle both change and growth while delivering ads. This will enable you to create high-quality ads, track their performance, and optimize them as needed.

4. Variety and quality

Another essential factor to consider when choosing an ad server is the quality and diversity of its services. It has a significant impact on improving your ad campaign efficiency and overall ad performance. It must provide you with multiple high-quality ad formats and rich media elements, including banners, interstitials, video rolls, and carousels. It should also enable you to preview the ad format before making the selection.

A robust ad server also lets you experience cross-platform ad formats for desktops and mobiles, run targeted campaigns, and improve your online presence.

5. Compensation Strategy

Choose an ad server with a transparent pricing structure for its services that will tell you precisely what you will pay without any hidden charges. You can also check if the server provides flexible plans to choose from based on your business needs and budget.

6. Continuous Support

A good ad server solution provides you with the right technical support and 24×7 customer service. Being available to respond to queries and assist customers in the ad-building process can be a crucial differentiator in choosing the right platform for you.

How can Aniview help?

With AI-powered optimization layer and next-gen features, Aniview’s Premium Ad Server enables publishers and advertisers to deliver multi-format video ads across web, mobile & CTV/OTT platforms seamlessly. Backed by next-gen features, Aniview’s Ad Player lets you easily manage inventory, demand channels, and ad delivery.

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