What is an Ad Server? How ad serving works (in plain English)

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You’ve opened countless web pages during your time on the internet.

When opening a new web page, unless you’re using an ad blocker (and often, even if you’re using one), chances are high that the presence of ads doesn’t come as a surprise to you.

Digital advertising – an industry forecasted to be worth $665 billion by 2026 – is ingrained so deeply into modern web browsing that ads are rarely given a second thought.

And yet, behind a simple ad for the latest car model, mobile game, insurance offer, or service promotion – lies a hidden process managed covertly by the ad tech ecosystem.

One of the central components of this entire process is called an ad server.

Take caution: After reading this guide to glean the lesser-known functionality of how ad servers work, you’ll never look at online advertising in quite the same way again!

Table of Contents

What is an ad server?

By definition, an ad server is a piece of ad tech (advertising technology) which is used by publishers, advertisers, ad networks, and ad agencies to coordinate digital ad placement.

The role of an ad server is to store ad creatives, to determine in real-time which ad to serve to an available ad unit (or “ad space”), to collect user data, and to report ad performance.

Ad servers are referred to as “first-party” or “third-party”, depending on who uses them:

  • Ad servers used by publishers are referred to as first-party ad servers.
  • Ad servers used by non-publisher parties are referred to as third-party ad servers.

Publishers are referred to as the “first-party” in ad serving, because as the owners of the digital properties upon which ads are served, they’re the closest party to user audiences.

Advertisers are referred to as the “third-party” in ad serving, because while their ad server communicates with websites owned by publishers, they don’t interact with them directly.

First-party ad servers are primarily used for managing ad serving on a self-owned web property, while third-party ad servers focus on serving ads to unowned web properties.

While modern ad servers typically contain all of the features either party would need, each party typically focuses on using the features which are most relevant to their own use-cases.

If you’re interested in finding out more, detailed information is available about the differences between first-party ad servers and third-party ad servers.

How does an ad server work?

To understand how an ad server works, looking at how a web server works first is helpful.

When a user visits a website:

  1. Their web browser sends a request to a web server to load the web page’s content.
  2. The web server, which stores the website’s content, serves the page to the browser.

The web page which is served to the user’s web browser is built using HTML code.

Among those lines of code are sections referred to as ad tags.

An ad tag is the piece of code which controls how the ad space on a website will function.

Similar to how a web server responds to web browser requests to serve web pages, an ad server receives and responds to requests to serve ads to a loaded web page.

When a user’s web browser begins loading the contents of a web page:

  1. The HTML of the page, which includes an ad tag, is read by the browser.
  2. The ad tag relays an ad call to the ad server – requesting an ad to fill an ad slot.
  3. The ad call is processed – based on how the ad server is configured.

Unfortunately, this is ad tech – an industry which is confusing by design.

At this point in the ad serving process, there are a variety of different ways the ad server might process an ad call – based on how the ad server is configured by a publisher.

To avoid an information overload, let’s take a look at each process one by one.

How ad serving works with a standalone first-party ad server

Standalone first-party ad servers manage ad calls in a very straightforward way.

When the ad call is received by the first-party ad server:

  1. The ad server processes information which is known about the user.
  2. Based on this information, the ad server selects an active ad campaign and creative.
  3. The ad creative is sent as a JavaScript tag to the user’s browser, displaying the ad.

Simple, right?

In this type of configuration, the ad creative is stored directly on the first-party ad server.

However, it’s rare in modern ad serving for publishers to store the ad creatives of the advertisers they work with on their own ad servers, even in direct deal arrangements.

Instead, third-parties host the ad creatives they’d like to use on their own servers.

How ad serving works when a third-party ad server is involved

The involvement of third-party ad servers is the status quo in modern ad serving.

The process starts the same way, but includes a few extra steps:

  1. The first-party ad server processes information which is known about the user.
  2. Based on this information, the first-party ad server selects an active ad campaign.
  3. The first-party ad server delivers the campaign’s ad markup to the ad slot on the web page. This code includes a URL which makes an ad call to the third-party ad server.
  4. The third-party ad server receives the forwarded ad call, and based on known information about the user, selects an ad creative to serve to the website.
  5. The third-party ad server passes the selected ad creative as a JavaScript tag back to the publisher’s website, where the ad is finally displayed to the user.

So, what are the advantages of third-party ad servers?

Put simply, it gives advertisers more control over the ads they want to serve.

In this configuration, the ad creatives are stored on the third-party ad server.

This means that advertisers can make changes to their ad creatives at any time – without having to request that the publisher update the ad creative files on their first-party server.

Third-party ad servers provide a range of benefits to advertisers:

  • The ability to store ad codes from across multiple campaigns
  • Being able to track user engagement with ads (impressions, clicks, conversions, etc.)
  • Access to data which enables reports to be verified from other ad tech platforms

So, is that all there is to serving ads?

Well, unfortunately, we’re still talking about ad tech.

That means there’s (always) more confusion to navigate.

It’s time to add SSPs and DSPs into the ad serving mix.

How ad serving works when SSPs and DSPs are involved

Like third-party ad servers, SSPs (supply-side platforms) and DSPs (demand-side platforms) are both part of modern ad serving’s status quo.

SSPs and DSPs are complicated enough in their own right to warrant separate explanations.

Our dedicated guide to SSPs, guide to DSPs, and an article that explores the differences between ad servers, SSPs, and DSPs are all available if you’re interested in learning more.

This can all start to get seriously confusing if you’re new to ad tech.

For now, all you need to know is that SSPs are used by publishers acting as an advertising supply source, while DSPs are used by advertisers acting as an advertising demand source.

The process of managing an ad call when SSPs and DSPs are involved is as follows:

  1. The first-party ad server processes information which is known about the user.
  2. The ad server delivers a piece of code back to the web browser which includes a URL that points to the SSP – and which also updates the ad tag with the user’s info.
  3. The web browser forwards the ad call to the SSP, which initiates a bid request.
  4. The bid request is sent to multiple advertising demand sources, including DSPs.
  5. Based on the known information about the user, each demand source runs an internal RTB auction to determine the best bid for the available ad inventory.
  6. When all of the auctions conclude, the best bids are submitted to the SSP for review.
  7. The SSP selects the winning bid and sends it as a piece of code to the web browser.
  8. The browser reads the code, sending a signal to the winning demand source directly.
  9. The winning demand source selects which ad to display – returning yet another piece of code to the web browser which contains a URL that points to the third-party ad server.
  10. The third-party ad server of the advertiser who submitted the winning bid returns the actual ad creative file to the web browser, which is then displayed at last to the user.

This entire process takes place in milliseconds – typically concluding before a page loads.

A bit bewildering, isn’t it?

This process in its entirety is referred to as programmatic advertising.

If you’re interested to learn more about the components of modern programmatic ad serving, you may be interested in our guide to the different types of programmatic advertising.

The history ad servers

So, where did all of this complexity surrounding ad servers originate from?

It’s a perplexing series of events which took place over the course of ad tech’s history.

After the first banner ad was served in 1994, advertisers rushed to take part in the action.

This led to the first ad servers being developed in 1995.

In the beginning, the targeting features of ad servers were very limited:

  • They could identify the web browser being used and it’s version
  • They could identify the language being used on a computer
  • They could identify a computer’s operating system
  • They could confirm the URL address being visited

Of course, advertisers were as eager to improve their yield optimization back then as they are today – a desire which would see the sophistication of ad servers evolve over the years.

Features and types of modern ad servers

The array of features available through modern ad servers is staggering, to say the least.

Various solution providers cater towards different parts of the ad tech ecosystem, with some prioritizing features for publishers, while others place emphasis on tools for advertisers.

In other cases, platforms also offer tools to assist parties in building their own ad servers.

Publisher ad servers are focused on analyzing user traffic and managing ad inventory.

To assist in these functions, first-party ad servers often include these features:

  • Ad Zone Configuration: The bread & butter of first-party ad serving, publishers are able to set detailed rules for how ad spaces will function on each of their web pages.
  • Contextual Targeting: Publishers are able to categorize their ad inventory based on the context of the web page it appears on, referred to as contextual targeting.
  • OpenRTB & Prebid.js Support: OpenRTB and Prebid.js (enabling header bidding) allow publishers to manage bid prioritization from advertising demand sources.
  • Analytics & Reporting: Publishers frequently provide reports from an analytics panel to the advertiser they have direct deals with to review campaign performance.

Advertiser ad servers are focused on managing and optimising multiple ad campaigns.

To assist in this otherwise overwhelming process, third-party ad servers offer these campaign management tools:

  • Frequency Capping: A technique known as frequency capping allows advertisers to limit how often an ad is displayed to the same user in a given timeframe.
  • Dynamic Creatives: Instead of serving static ads, advertisers may serve ads which are made up of multiple, user-targeted components by using dynamic creatives.
  • Analytics & Reporting: Advertisers make use of analytics reports with an emphasis placed on campaign performance metrics tied to the effectiveness of their ad spend.
  • Campaign Optimization: Based on campaign performance, modern third-party ad servers automatically make adjustments to improve received clicks and conversions.

More features and types of ad servers

Ad servers are capable of meeting just about any objective a publisher or advertiser wants to accomplish – especially when custom development is involved.

To list several more common features that ad servers may include:

  • Dayparting to serve ads on certain days or at certain times of day.
  • Behavioral targeting to serve ads based on a user’s browsing history.
  • Demographic data targeting to cater ads to users based on their characteristics.
  • Geotargeting to serve ads to various geographical locations.
  • Self-serve advertising portals that provide frictionless ad buying experiences.
  • Goal optimizations that prioritize serving ads to get users to take a certain action.
  • Flexible ad unit management to deliver ads in unique configurations to a web page.

In addition to these features, some ad server solutions offer even more detailed support and configuration options for specific types of ad serving, including:

A list of top ad server software solutions for 2021 and beyond

There are a lot of different ad server software solutions on the market.

AdTech can be a tough industry to navigate, as the strengths of each platform aren’t always made clear in the “marketing speak” found on the front pages of each of these platforms.

To make things a bit easier, we’ve listed a few ad servers that are worth taking a look at:

AdButler

That name seems familiar!

We’re first on our own list because we’re thrilled to have exceeded the needs of some of the world’s top publishers – including Microsoft, Sony, Asus, Corsair, HP, Costco, and The Home Depot.

We’re also the highest rated ad server on Capterra and G2.

Our specialties as an ad server software provider include:

  • Support for all ad formats
  • Support for OpenRTB, header bidding, and S2S
  • Supply and demand source management
  • Contract management
  • Automated performance reports
  • Customizable self-service advertising portal
  • API & SDK access for custom infrastructure development
  • 100% service uptime since 2017 (thanks to AdButler’s proprietary global cloud server network)
  •  24/7 access to a dedicated support team of ad tech experts

It’s a long list to be sure.

That’s because the platform has over 20 years of development based on real-client feedback baked into it’s all-in-one ad serving experience.

We recommend taking a closer look at AdButler if you’re looking for a time-tested ad serving solution that supports the capacity to add a touch of customization to your AdTech stack.

Google Ad Manager

As one of the most prominent players in digital advertising, Google Ad Manager (previously “DFP” or “DoubleClick for Publishers”) solution has to be included in this list.

There are several reasons to consider Google Ad Manager as an ad server solution:

  • Google Ad Manager is a free ad server solution for small to medium-sized businesses that receive less than 90 million non-video ad impressions per month
  • It’s unlikely that an ad server run by Google is going to shut down anytime soon
  • Access to programmatic demand is made easy through Google’s ecosystem

However, the are also some points worth considering past Google’s obvious ease-of-access:

  • Customization is non-existent for Google Ad Manager
  • Be prepared to deal with highly-rigid corporate support channels
  • Google will have full access to all of your website and advertising data
  • Google Ad Manager relies heavily on tag deployment, which can reduce performance
  • It’s unclear exactly what Google’s approach to the end of third-party cookies will be

Smart AdServer

Smart AdServer is an all-in-one ad serving platform that competes with Google Ad Manager.

One of the biggest advantages of Smart’s platform is the inclusion of its integrated SSP platform, which offers a pre-established connection to a wide range of demand sources.

Smart is also integrated with services including DMPs and brand safety providers.

Because of these features, Smart AdServer can be a good option for publishers that are looking for an easy way to access programmatic demand sources with minimal overhead.

Despite its powerful programmatic service offering, there are some factors to consider:

  • As a major platform, Smart has less capacity to accommodate custom development
  • With a focus on programmatic, Smart offers less support for first-party ad serving
  • As an SSP, Smart may take a higher ad revenue cut than a standalone ad server

Revive Open-Source Ad Server

Revive Ad Server is an open-source ad server originally launched by OpenX back in 2013.

Revive Ad Server may be an effective ad serving solution for you if:

  • You’re looking for a self-hosted ad server without fees
  • You don’t need a significant amount of customization for your ad serving platform
  • You’re confident in hosting, running, and updating the code for the ad server yourself

Of course, the only major drawback of an open-source, self-hosted ad server solution is that you’ll be on your own when it comes to setup and maintenance.

While a community support forum exists, use of the Revive Ad Server is very much a “hands on” experience, which may come with a high technical expertise overhead cost for teams.

Choosing Your Ad Server Software Solution

There are a lot of factors to consider when setting up an ad server software solution.

Whether you’re an advertiser or a publisher, sometimes prebuilt solutions will meet your needs – while other times, custom developments will yield better results.

Consulting an AdTech expert can save time and provide an overview of all the best options.

The AdButler team has over two decades of experience in helping publishers and advertisers to configure an optimized ad server solution.

We’d love to share a conversation with you. Ask us a question today!

Kyle Strong