What is an Ad Server? | A Complete Guide for Publishers

What is an ad server blog cover

The advertising ecosystem is complex and includes many parties, but an ad server is one of the most important. 

Why? 

Because the ad server is a fundamental component that decides which ads appear on which websites and when. 

This article will explain what an ad server is, how it works, and what types of ad servers exist. 

Table of Contents:  

What is an Ad Server?

​​An ad server is technology responsible for storing, managing, and serving ads on a publisher’s website based on targeting attributes. 

Additionally, an ad server collects advertising data (such as impressions and clicks) to track the performance of ad campaigns. 

Depending on the end-user, an ad server can be first-party (used by publishers) or third-party (used by advertisers). 

The most advanced ad serving platforms are equipped with both first-party and third-party ad server functionality (e.g., Google, Xandr, Adform).

Later on, we are going to discuss the differences between these two ad servers.

How Does an Ad Server Work?

An ad server is powered by technology that inserts ads on websites. The core of any ad serving platform is an ad decision engine and ad planning engine. 

Ad decision engine selects the best ad for display according to the rules and goals (such as targeting, pacing, ad format, ad placement, priority, etc.) defined by publishers and advertisers. 

Ad planning engine distributes the ad impressions evenly during a selected time frame or as specified by AdOps.

Why Do Publishers Need an Ad Server? 

Publishers need an ad server to run direct campaigns. However, ad servers can also be used for programmatic needs such as to connect to multiple programmatic vendors and/or for ad inventory tests. 

In addition, having an ad server for publishers has the following features: 

  • sell ad inventory directly to advertisers;
  • serve ads based on predefined conditions;
  • advanced analytics and reporting;
  • opportunity to test and compare different SSPs and plataformas de monetización like Setupad to maximize ad revenue;
  • a wider choice of digital ad formats compared to programmatic, such as expandables, popups, popunders, etc.;
  • ad optimization.

Ad Server vs Ad Network

An ad network compared to an ad server is not a technology but rather a company that combines a group of websites and apps. It connects them with advertisers who want to promote their products. 

Ad networks use ad servers to display ads but the two are not the same. 

The central idea of an ad network is to collect and categorize ad inventory from publishers and offer it to advertisers for a small commission. 

The table below outlines key differences between an ad server and an ad network. 

Ad ServerAd Network
TypeSoftware/technologyGroup of websites and apps
Selling methodDirectThrough an ad network
PurposeTo manage, serve, and track ad campaignsTo collect ad inventory from publishers and sell it to advertisers
Used byPublishers, advertisers, ad networks, ad agencies, etc.Advertisers and ad agencies (to buy ads); publishers (to join the ad network)
ValueStreamlines the process of selling, serving, and tracking direct, in-house, and programmatic ads in real-time across websites, mobile sites, and appsHelps advertisers buy the best inventory across multiple publishers. May also re-sell premium ad inventory

As mentioned, ad servers can be used by publishers (first-party ad servers) and advertisers (third-party ad servers). 

Let’s look at each of them in turn. 

1st Party Ad Server (Publisher Ad Serving)

First-party ad servers allow publishers to manage their ad slots and sell their ad inventory in one interface. They’re first and foremost used for managing direct campaigns

Another reason why you might want to have an ad server is to set up location and device targeting. 

However, if a first-party ad server has such technical capability, it may allow third-party partners (such as SSPs) to compete for the publisher’s ad inventory programmatically (e.g., Adform ad server). 

For example, it is possible to set up a waterfall to organize ad inventory or connect to a header bidding wrapper to maximize competition for ad slots and increase fill rates

A first-party ad server is also responsible for:

  • media files storage for ad creatives (images, videos, etc.);
  • the insertion of direct, in-house, and programmatic ads on the publisher’s website;
  • ad optimization (including frequency capping, planning, and distribution of ad impressions);
  • targeting;
  • the selection of the most relevant ads for display; 
  • tracking and reporting;
  • inventory forecasting (a process that checks how much ad inventory a publisher has available for the future to avoid overselling). 

How does a first-party ad server work?

how does first party ad server work

Is an SSP an ad server?

A supply-side platform (SSP) is a sell-side technology designed for publishers to offer their ad inventory to multiple DSPs, ad networks, and ad exchanges in real-time, making it available to more potential buyers. 

With time, many first-party ad servers developed into SSPs that support header bidding technology, which allows publishers to offer their ad inventory to multiple demand partners simultaneously. 

Thus, a first-party ad server advanced its technology to manage both direct and programmatic campaigns with multiple demand partners.

3rd Party Ad Server (Advertiser Ad Server)

A third-party ad server is used by advertisers to track, analyze, and optimize their ad campaigns and to check if the impressions were delivered. On the other hand, a first-party ad server is used by publishers to manage and organize their ad placements from one place.

First-party (publisher-side)Third-party (advertiser-side)
PurposeTo serve ads appearing on the publisher’s website/app To store and manage ad creatives across multiple publishers and ad networks
Used byPublishersAdvertisers, ad agencies
ValueAllows monetizing ad inventory through direct or programmatic deals (if connected to adtech platforms)Allows to optimize and track ad campaigns in real-time and effectively spend advertising budget

The fact that publishers and advertisers use different ad servers leads to an ad discrepancy, which is an inconsistency in data between first-party and third-party ad servers. 

For example, numerous redirects or a network connection latency may result in ad impressions recorded on the advertiser’s ad server and not on the publisher’s.

A third-party ad server is also responsible for:

  • managing the media buying across many publishers and ad networks in one place;
  • storing all information about the ad campaigns;
  • running direct and programmatic campaigns;
  • managing ad creatives;
  • tracking ad campaign performance (e.g., impressions, clicks); 
  • setting up tracking parameters;
  • allocating ad budget;
  • running campaigns across multiple publishers using a wide range of ad formats.

How does a third-party ad server work?

how does third party ad server work

Is a DSP an ad server? 

A demand-side platform (DSP) is a buy-side technology designed for advertisers to programmatically buy ad impressions across multiple publishers’ websites based on targeting parameters. 

Most DSPs today are equipped with an ad server, but the two are not the same and serve a different purpose. 

DSPs buy ad inventory in a programmatic way. They also streamline the media buying process for advertisers by:

  • estimating the value of bids;
  • setting up ad creatives; 
  • collecting and analyzing data from cookies and other user identifiers;
  • decide which ad impressions to buy over the RTB protocol. 

The confusion arises because many adtech companies (Xandr, Adform, Improve Digital, and more) today are full-stack platforms that combine SSP, DSP, and ad servers under the same roof. 

The picture below outlines the relationship between the publisher’s and advertiser’s ad servers, and other adtech platforms. 

first party ad server

Now that we know the difference between first-party and third-party ad servers, let’s see how you can get started with them. There are generally two main routes–hosted ad server and self-hosted (open source) ad server.

A Hosted Ad Server 

A hosted ad server is hosted by an ad server company and doesn’t require any special technical knowledge to use. Essentially, this is a SaaS technology that you “rent” by paying a yearly/monthly fee for access. 

If you need an ad server for basic ad operations, a self-hosted ad server is probably the best solution as it provides all the necessary functionality. 

However, since most hosted ad servers are JavaScript-based, they can potentially slow down your website. 

Example of Hosted Ad Server: Smart 

A Self-hosted Ad Server (Open Source Ad Server)

The main feature of a self-hosted ad server is that the technology is readily available for free or a small one-time fee. However, the maintenance and troubleshooting of this type of ad server fall on the shoulders of a publisher. 

A self-hosted ad server is also not particularly customizable, and you also need your own server to host a script.

Example of Self-hosted Ad Server: Revive 

Top Ad Servers for Publishers 

All ad servers below support header bidding technology, and, therefore, can be used to optimize ads between direct and programmatic sources.

1. Google Ad Manager (GAM)

google ad manager logo

Google Ad Manager (formerly DoubleClick for Publishers) is the most popular third-party ad server, which provides a respectable number of features and customization options, access to API, reports, historical data, and more. 

The free (and most widely used) version of GAM is designed for small-medium publishers and allows up to 90-200 million monthly impressions (number depends on your location). 

GAM offers a programmatic demand to Google AdSense and Google AdX, so it is the best choice for publishers looking to monetize their ad inventory programmatically. 

But it is also an excellent ad server to manage direct campaigns and to use together with monetization platforms like Setupad. 

2. Adform

adform logo

Adform is a full-fledged ad server with its own SSP, DSP, and DMP functionality. It offers a high-value rich media ad format support, cross-channel marketplace, analytics for more monetization opportunities, and tools to maximize the value of each ad impression.

Overall, Adform is a powerful ad serving platform for publishers whose focus is on programmatic demand. 

3. Smart 

smart logo

Smart is an ad server that also acts as an SSP allowing publishers to reach premium buyers and increase competition on both direct and programmatic sources. 

Smart can be integrated with other SSPs and connected to the client-side or server-side header bidding wrapper. It offers many useful features such as delivery planning, inventory forecasting, advanced targeting, and top-level security. 

Can I serve ads without an ad server?

The answer is yes, but only if a publisher doesn’t have direct campaigns. This is achieved by installing a code directly onto the publisher’s site, which sends calls to programmatic partners. 

But what if you want to display ads only in specific countries, say, England? In this case, you would need to obtain the support of an ad server to set location targeting. 

However, if you are a Setupad client, there is no need for that. 

Why? 

Because we use our own ad server and have the capability to set targeting parameters such as devices and countries. By doing this, our clients’ banners load faster, and no impressions are lost in an exchange between the publisher’s and the partner’s ad servers (usually, this number is around 5-8%). 

The Bottom Line

Having an ad server depends on every publisher’s needs and goals. Ultimately, the main question you need to answer is how important direct campaigns are to you. 

If direct campaigns aren’t the primary source of your ad revenue, consider not having an ad server. Instead, work with Setupad and benefit from the most up-to-date and complete stack of programmatic monetization technologies. In this case, there are no additional resources and costs. 

If direct campaigns are important, then you need to choose the right ad server that can be efficiently integrated with programmatic technologies (prebid adapter). 

If you want to run direct and programmatic ads into one unified auction, there is a need for more advanced technology, like SaaS. However, building such technology is a time-intensive and costly endeavor.  

Setupad’s header bidding SaaS was specifically designed to optimize direct campaigns with programmatic demand. Such technology would decrease your costs by at least 90%. 

Do you use an ad server, and if so, which one? Let us know in the comments! 

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