What is an ad server and how does it work?

Ad servers are the engines behind every online ad you see. They decide which creative shows up, where, and for whom. Born in 1995, they’ve outlived countless AdTech trends and still sit at the center of the stack. Today, they power direct deals, programmatic ad campaigns, retail media networks, and connected TV alike. This article breaks down what an ad server does, how first-party and third-party servers differ, how the technology works step by step, and which platforms lead the market. 

What is an ad server? 

An ad server is a piece of advertising technology (AdTech) that is used by publishers, advertisers, ad agencies, and ad networks to manage and run online advertising campaigns. Ad servers are responsible for making instantaneous decisions about what ads to show on a website and then serving them. On top of that, an ad serving platform collects and reports data (such as impressions, clicks, etc.) for advertisers to gain insights from and monitor the performance of their ads, helping them understand exactly where their ad spend is going. 

On the most basic level, an ad server resembles WordPress. WordPress is used to manage a website’s content in the same way as ad servers are used to manage and display ad content to the right user on a website.

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The first ever ad server 

Ad servers first started appearing in 1995 back when the online advertising industry was in its infancy and were used to help publishers manage online ads and control their delivery. 

Back then, online ad-targeting possibilities were minimal. Advertisers could target ads based only on the very limited header information pulled from the user’s browser, such as: 

• The language set on the user’s computer 

• The URL of the page that the ad is being loaded onto 

• The browser type and version 

• The user’s operating system 

Arguably, the first ever ad server was set up in 1995 by FocaLink Media Services, a company founded by Dave Zinman, Andrew Conru, and Jason Strober. 

Since then, ad servers have come a long way, constantly evolving along with the whole ecosystem to meet the growing demands of both advertisers and publishers. 

Some of the functionalities that were added to ad servers with time, like targeting, budget control, and frequency capping, have also been incorporated into many of the newer ad tech platforms, such as DSPs and SSPs. 

What is the role of an ad server? 

Ad servers can be used by publishers (first-party ad servers) and advertisers (third-party ad servers). While first-party and third-party ad servers are essentially the same technology, they are used by publishers and advertisers for slightly different reasons. These are the two main types of ad servers in the ecosystem today. 

First-party ad servers 

First-party ad servers allow publishers to manage ad slots on their websites and display ads that have been sold directly to advertisers via direct campaigns. They help maximize ad revenue by ensuring every impression is filled with the highest-value creative available. 

In the event that no direct campaigns are available, first-party ad servers will act as a management platform helping to decide which ad codes (e.g., those from a third-party ad server, SSP, or ad network) to serve in their ad slots. Each ad placement is evaluated in real time to determine the best-performing option. 

A first-party ad server is responsible for targeting, i.e., making decisions about which ads to display on a website based on nuanced targeting parameters, serving ads, and collecting and reporting the data (such as impressions, clicks, etc.). 

Additionally, they are used for inventory forecasting, i.e., how much ad inventory and of what type the publisher will have available for sale in the future based on the current campaigns & traffic projections. 

Third-party ad servers 

By using ad servers, advertisers can easily track their advertising campaigns. An advertiser’s ad server ad tag is loaded by the first-party ad server, so its functionality is limited compared to first-party servers. It is mostly used only to collect campaign data and verify certain metrics, such as impressions and clicks. 

Third-party ad servers can also be used for some creative optimizations, e.g., the advertiser can decide to change the ad creatives used in a campaign or run a series of A/B tests of the creative, but the targeting itself is determined on the first-party ad server side. This applies whether the campaign involves a static banner, a video ad, or any other interactive ad format. 

The primary difference is that a third-party ad server is used by the advertisers to aggregate all the campaign information (reporting, audience) across all publishers, ad networks and other platforms the campaign runs on, and serves as an auditing tool to measure and verify whether the impressions were actually delivered properly. Publishers and advertisers, for various reasons, may report different numbers, but a certain degree of discrepancy is considered normal. Third-party ad servers also offer advertisers ownership and control of the collected data (information about the audience). 

How does an ad server work? 

When the popularity of the Internet started to take off in the early to mid-1990s, traditional print publishers began moving online. This created vast amounts of content and a chance to leverage a dormant opportunity — display ads. Every digital ad ecosystem we know today traces back to this moment. 

During the first years of online advertising, the buying and selling of ads between an advertiser and a publisher was a direct and manual process. Advertisers had to buy ad placements one at a time through individual negotiations. Publishers soon discovered they needed a more efficient and easier way to manage the various advertisers’ campaigns that ran on their website. It was here that the first-party (also known as publisher’s ad server) was born. 

How does a first-party ad server work?

Here’s how a first-party ad server works: 

1. A user visits a website, and the browser sends a request to the publisher’s web server asking for the page’s content (i.e. HTML). 

2. The publisher’s web server returns the HTML, and it starts rendering the page’s content. 

3. An ad request is sent to a publisher’s ad server to fill the ad space on the page. 

4. The publisher’s ad server chooses an ad campaign based on the information obtained about the user. 

5. The publisher’s ad server sends back the JavaScript tag to the website and the ad is displayed to the user. 

After a number of years, advertisers also discovered that they needed a way to host their creatives (i.e., the actual ads) and measure the performance of their campaigns (e.g., by analyzing impressions, clicks, and conversions) across multiple ad placements and publishers. The solution to these problems came in the form of a third-party ad server (also known as an advertiser’s ad server). 

How does a third-party ad server work? 

Third-party ad servers work in a slightly different way to first-party ad servers: 

1. A user visits a website and the browser sends a request to the publisher’s web server asking for the page’s content (i.e. HTML). 

2. The publisher’s web server returns the HTML and it starts rendering the page’s content. 

3. As request is sent to a publisher’s ad server to fill the ad slot on the page. 

4. The publisher’s ad server chooses an ad campaign based on the information obtained about the user. 

5. The publisher’s ad server sends back the ad markup (the code that’s inserted into the ad slot) containing a URL pointing to the advertiser’s ad server 

6. The ad markup sends a request to the advertiser’s ad server for the ad markup and counts an impression. 

7. The advertiser’s ad server sends the markup to the publisher’s site and the ad is displayed to the user. 

This ad serving technology runs in milliseconds, fast enough that the user never notices the back-and-forth happening between servers. 

Third-party ad servers allow advertisers to: 

• Store and manage their ad codes 
• Set up tracking criteria for ad campaigns 
• Track the performance (impressions, clicks, conversions, etc.) of the whole campaign across all publishers in a single system 
• Measure the reach of a campaign while taking into account the co-viewership across publishers 
• Verify the reports provided by the publishers 
• Help optimize campaigns 

The most popular ad servers in the online advertising ecosystem 

Most of the leading ad-server platform providers offer solutions for both advertisers and publishers. Some companies even opt for a self-hosted ad server for greater control over their data, infrastructure, and customization, while others prefer cloud-based solutions integrated with their DSP of choice.

Kevel offers the infrastructure APIs needed to quickly launch custom ad platforms for sponsored listings, internal promotions, native ads, and more. Their customers include Ticketmaster, Yelp, Strava, Mozilla, and many other innovative brands.

AdButler is a full-stack ad serving solution for publishers and supply-side networks, offering self-serve marketplace, custom development, real-human support, advanced targeting, and more. Some of the businesses using AdButler are Costco, Pattison Media, and GoGoAir. 

OpenX offers access to advertising space on some of the most reputable and famous publisher sites. The company delivers product offerings to both advertisers and publishers. Among advertisers using OpenX are brands such as Electronic Arts, Samsung, and CBS Interactive.

Atlas Solutions, acquired by Facebook to complement its existing Facebook advertising platform, offers advanced statistics, demographic customer targeting, cross-device advertising, and more.   

Ad server allowing the management of advertising inventory with a number of convenient reporting tools.

An all-in-one platform that dynamically allocates ads by incorporating all activity on the network: traffic and inventory forecasting, delivery planning, guaranteed campaign commitments, offers, and targeting parameters. 

FAQ

What is an ad server?

An ad server is an AdTech platform that decides which ads to display and delivers them to users in real time.

What are examples of ad servers?

Popular ad servers include Google Ad Manager, Kevel, AdButler, OpenX, and Equativ.

What is the difference between LDAP and an ad server?

LDAP is a directory protocol used to manage user authentication and access within networks, while an ad server is an advertising platform used to deliver and track online ads.

How does an ad server work?

When a user visits a webpage, the ad server selects the most relevant ad based on targeting criteria, delivers it to the available ad slot, and records the resulting impression, click, or conversion.

Final thoughts 

Ad servers remain one of the most foundational pieces of the AdTech stack. As programmatic, retail media, and CTV continue to reshape how campaigns are bought and measured, the ad server’s role has only grown more strategic. Choosing the right platform, integrating it cleanly with your DSPs, SSPs, and measurement partners, and building workflows that scale will define how competitive your campaigns can be in the years ahead. 

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