- What is an Ad Server?
- Ad Server Targeting
- Ad Servers & the Online Advertising Value Chain
- Innovation & Ad Servers
- Prominent Ad Servers
What is an Ad Server?
An ad server is the name given to the set of technology that is used to deliver, manage and optimize banners, text ads, and rich media across a range of publisher websites. Advertisers, agencies and ad networks will send publishers a line of code that calls up the relevant set of creative directly from the ad server each time an ad is scheduled to run. This allows the advertiser to make changes to the creative, modify rotations, or add new creative units without needing to re-contact the publishers.
Ad servers also provide critical reporting functionality that allow advertisers and publishers to see how many impressions, clicks, and conversions their campaigns are generating. Advanced ad serving technology will optimize a campaign in real time based on these performance metrics, increasing the number of higher performing creative impressions in some areas, while decreasing it in others. Other important features that advertisers and publishers look for in an ad server are serving speeds, traffic management, and planning and predictive modeling tools.
The following are some screenshots of the Zedo ad serving interface, a popular 3rd party adserver whose clients include Hotwire, Hi5 and CNET.
Campaign Overview Page: breakdown of impressions, clicks and conversion by creative:
Campaign Optimization Page: advertisers can set a minimum eCPM for their campaigns:
Ad Server Targeting
One of the most important aspects of any ad server is it's ability to use targeting to drive relevance by serving the right ad to the right person at the right time. Different ad servers offer varying levels of targeting ability. The following are the types of targeting currently available in the market:
- Channel: Targets all publishers that fall within a certain content category,
such as automotive or entertainment. Publishers are manually grouped by the ad server into the various content channels.
- Site Specific: Allows advertisers to target specific websites in the ad server's network.
- Day Part: Allows advertisers to specify the days of the week, and times of day that they would like their
campaign to run.
- Connection Speed: Delivers advertising based on the consumer's Internet connection speed (dial-up vs.
broadband).
- Keyword: Targets advertising based on specific key words or phrases that a consumer searches for, or that
are found in the publisher's content.
- Geo-Targeting: Delivers advertising to consumers in specific countries, states, cities, or ZIP codes.
Typically uses IP geolocation data.
- Performance: Targets advertising based on click-through and conversion performance across various
creative units and media placements.
- Contextual: Targets advertising based on a dynamically generated definition of a specific webpage's
content. Unlike basic keyword targeting, contextual targeting is "intelligent" -
it knows the difference between Paris Hilton and Paris, France based on the content surrounding those keywords.
- Behavioral: Targets people, not pages, based on an analysis of a consumer's click-stream and behavioral data.
Ad Servers & the Online Advertising Value Chain
Even though they serve completely different functions, ad servers and ad networks are still commonly confused with each other. The reason is that almost all of the original ad servers were developed by ad networks, including DART (DoubleClick) and Open AdStream (24/7 Real Media). Today, most of the major ad networks still operate their own ad servers, but the market also contains third-party party stand-alone ad servers such as Atlas, Accipiter and Zedo. These companies offer ad serving technology using an ASP model that customers license on a CPM basis.
Most ad servers offer solutions for both advertisers and publishers, customizing the user interface and reporting based on the type of customer using the application. Advertisers will want to be able to launch, manage, and track all of their campaigns across the entire network of publishers. Inversely, publishers will want to be able to launch, manage and track all of the advertisers running across their website. Smaller ad networks will often choose to license their ad serving technology, rather than build it in house. These types of customers will want the best of both worlds - the ability to manage multiple advertiser campaigns across a range of publishers.
Ad servers also provide the ability to create sub-accounts. This allows advertisers to grant publishers access to the reporting data for the specific campaigns that they are running. Ad networks use this functionality to create sub-accounts for both the advertisers and publishers that they work with.
Some companies focus on specific areas of the ad serving technology itself, seeking to license it to other ad servers rather than build a customer-facing application themselves. For example, ContextWeb offers a contextual targeting solution that is currently being licensed by a number of ad networks, including Tremor Network. Another ad serving company focused on targeting technology is Quova, which has become the online authority on IP intelligence, and the leading provider of geolocation data and services to other ad servers.
Innovation & Ad Servers
There's been a lot of debate in the online advertising industry as to whether there's a solid business to be found in ad serving. Over the past few years the ad serving function has become more or less a commodity, which has pushed down CPM serving costs. The poster child for this trend is ad serving giant DoubleClick. In 2002 the company sold off it's ad network and media sales business to L90 for $9 million in order to to focus on ad-serving and data analysis. When the online advertising market began to take off again in 2003, DoubleClick's stock languished behind those of other online advertising companies such as Yahoo and Google. In 2004, the company announced that it was putting itself up for sale, and by 2005 was acquired by private equity firms Heller & Friedman LLC and JMI Equity for $1.1 billion.
Today, ad servers are attempting to create value in a number of ways. Some are integrating backwards in the online advertising value chain, expanding their advertising planning, trafficking, and management services. Several ad servers have launched ad networks focused on their specific targeting niche. For example Tacoda, one of the leading providers of behavioral targeting technology, announced in late 2005 that it was launching a behaviorally-driven online ad network. Contextual targeting provider ContextWeb recently made a similar announcement.
Other ad servers have decided to focus on developing an expertise in their core targeting technology. This enables them to export relevance to other online advertising companies regardless of whether they are ad servers, ad networks, agencies, advertisers or publishers. Quova's geo-targeting service is powered by a technology that gathers hundreds of millions of data points each day, drawn from a known universe of over 4 billion IP addresses. The data covers geographic locations of connected devices, network performance, IP addresses, router hops and other structural characteristics of the Internet. Rather than develop such a complex system to enable geo-targeting in-house, most online advertising companies simply license that ability from Quova. The company's customers include five of the world’s six largest global Internet companies.
Some ad servers have even begun expanding their services into the offline world. In August of 2005 Accipiter announced a partnership with Clear Channel Communications whereby the ad server would begin managing the tracking, billing, ad serving and ad planning for Clear Channel TV, radio, and online ads.
Company Profiles:
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Launched behaviorally-targeted ad network based on strength of behavioral ad serving technology. Backed by Masthead, Rho, & Union Square Ventures. More |
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Leveraged contextual ad serving technology to launch contextually-targeted ad network. Customers include USAToday.com & Meredith Corporation. Backed by DFJ More |
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Leading provider of IP-based geo-targeting data and services to online businesses. Backed by Mobius VC, IDG Ventures, Nexus Group and Schoffstall Ventures. More |
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Ad serving technology combines statistical & predictive algorithms, demographic and geographic segmentation & performance tracking. Backed by STV. More |
Prominent Ad Servers
| Ad Server | Owner | Monthly Impressions | Number of Clients | Largest Clients | Hosting | Pricing |
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DoubleClick | 290 billion | 1,000 | AOL, MySpace, Publicis, Carat, Omnicom, Time Warner, eBay | ASP, licensed solutions | Varies by volume |
 |
24/7 Real Media (TFSM) |
200 billion | 2,100 | Classmates, Clear Channel Radio, Comcast, MarketWatch, CareerBuilder, Forbes, Weather.com, WWE | ASP, licensed solutions | Varies by volume |
 |
aQuantive (AQNT) |
132 billion | 1,000 | mOne, OMDi, iDeutsch, FCBi, Carat Interactive, Euro RSCG, Tribal DDB, Vonage, Monster, Kraft, Mediasmith | ASP | Varies by volume |
 |
Accipiter | 50 billion | 350 | Associated New Media, Cars.com, Clear Channel Communications, E!Online, Freeserve, NineMSN, SBC Smartpages, ShopLocal | ASP, licensed solutions | Varies by volume |
 |
ValueClick (VCLK) |
25 billion | 700 | eBay, United Airlines, Dell, Hewlett-Packard, Canon, Fandango, AOL, Samsung, America West Airlines, Organic, Fallon | ASP | Varies by volume |
 |
ValueAd | 22 billion | 307 | AdOrigin, MTV Italy, Reunion.com, Claria, Russian Business Consulting | ASP, licensed solutions | Varies by volume |
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Zedo | 21 billion | 240 | Hotwire, Hi5, CNET Rich Media, National Enquirer, Quinstreet, Freeze.com, Undertone Networks | ASP, licensed solutions | Varies by volume |
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DoubleClick (Acquired in June 2006) |
18 billion | 200 | Atom Shockwave, Universal Television Networks, Adtegrity, A&E, Gorilla Nation Media, Dennis Publishing, iFilm | ASP, licensed solutions | Varies by volume |
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Bluestreak | 10 billion | 120 | Temerlin McClain, MBNA, Breathe Interactive, Range Online, Universal McCann, Slingshot | ASP | Varies by volume |
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CheckM8 | 5 billion | 80 | Date.com, NVU eMedia, WWE (rich media), New York Times (rich media), Washington Post (rich media) | ASP | Varies by volume |