What is an Ad Server: How Does It Work

The ongoing boom of digital advertising continues to drive demand for various AdTech solutions, including ad server software. The size of the ad server market hit the mark of around $2.84 billion in 2024. Now, this figure is projected to increase to $5.25 billion by 2033, which reflects a CAGR of over 7% during the period from 2025 to 2033.

In our blog post, we will talk about ad servers and their role in the digital advertising industry today.

What is an Ad Server?

The first question that you may have is: “What is an ad server?”.

It plays a central role in the digital advertising ecosystem and helps automate the process of selecting which ads to display, as well as when and to whom to show them.

Benefits of an Ad Server for Publishers

• Revenue optimization. Ad servers choose the highest-paying ad for each impression.
• Better control over ad inventory. Publishers can decide which ads are allowed and where on the page ads will be shown. This helps them avoid unwanted or low-quality ads.
• Multiple demand sources. Ad servers integrate with direct advertisers, ad networks, and SSPs (supply-side platforms).
• Real-time analytics. Ad servers provide live data on ad performance, revenue, fill rate, eCPM, and click-through rate (CTR), which enables quick decisions.
• Frequency capping. Publishers can set limits for how often the same person sees ads to enhance the user experience.

Benefits of an Ad Server for Advertisers

• High targeting precision. Ad servers deliver ads based on various factors, such as demographics, behavior, location, device, etc. This helps make sure that the right message reaches the right audience.
• Unified campaign tracking. With ad servers, advertisers can efficiently track impressions, clicks, conversions, and other KPIs in one dashboard and optimize campaigns in real time.
• Ad creative testing. Brands can easily run multiple versions of an ad to test which performs best.
• Cross-channel campaign management. Ad serving solutions can simultaneously manage ads across websites, mobile apps, CTV and video platforms.
• Brand safety. Ad servers can block inappropriate placements and unsafe content environments to protect brand reputation and ad spend.

How Does an Ad Server Work?

Traditionally, the workflow of an ad server looks the following way:

1. When a user visits a page, this website or app needs to contact the ad server in order to get an ad that will fill a designated space.
2. The browser or the app sends an ad request to the server. This request has to include information about the page content type and category, user data (device type, cookies, location, etc.), and parameters of the available space for ad placement.
3. The ad server analyzes the received request and evaluates all available ads based on targeting criteria, campaign priorities, ad performance metrics, and real-time bidding data (if programmatic advertising is applied).
4. The ad server selects the most suitable option and sends the appropriate ad creative to the website or app.
   All this happens within milliseconds.
5. If the user has any interaction with the ad (for instance, views or clicks it), this info is recorded by the ad server.
6. All the recorded data, like impressions, clicks, and conversions, is available to publishers and advertisers via dashboards. Advertisers can also access information about their revenue.

Different Types of Ad Servers

There are several categories of ad servers defined based on their users and purposes.

First-party ad servers (publisher-side)

They are used by publishers to manage and deliver ads directly on their own properties.

For instance, a news website can rely on such a server to control which ads appear in each section.

Key functionalities of these solutions include:

• Direct-sold campaign serving;
• Ad placement prioritizing;
• House ad rotation;
• Yield management.

Examples: Google Ad Manager, Kevel.

Third-party ad servers

These ad servers are used by advertisers to serve and track ads across multiple publisher facilities.

Such servers do not control the media space. They are focused on campaign execution, tracking, and optimization.

Core features of third-party ad serving platforms:

• Centralization of ad performance tracking across various media platforms;
• Monitoring of impressions, clicks, and conversions
• A/B testing across different sites;
• Frequency capping across channels.

Examples: Sizmek (by Amazon), Adform, Flashtalking.

Ad Servers in the Digital Advertising Ecosystem

Ad servers act as the infrastructure layer that enables ad delivery, regardless of where the ad request comes from, including direct deals, ad networks, or programmatic platforms.

As ad networks aggregate ad inventory from many publishers and sell it to advertisers, an ad server can send requests to multiple networks and serve the ad that perfectly matches targeting criteria.

Meanwhile, ad exchanges are real-time auction platforms that connect publishers and advertisers via SSPs and DSPs (demand-side platforms).

The ad server calls the SSP. In its turn, the SSP sends a bid request to multiple DSPs through the exchange.

What is an Ad Exchange: The Complete Guide

This complete guide covers how ad exchanges facilitate the programmatic buy and sell of ad space via real-time bidding. Learn how they work!

By comparing bids from networks and exchanges, ad servers help publishers get the most profitable ad.

Integration with DSPs

Ad servers often work in tandem with DSPs in the programmatic supply chain.

The ad server provides inventory to DSPs through SSPs or direct deals. DSPs place bids on impressions in real time in accordance with user targeting needs. To get more information about the role of demand-serving platforms in the digital advertising space, you can read our detailed guide.

When a bid is won, the ad server is responsible for delivering the winning creative.

Advantages of integrating an ad server with a DSP:

• Access to a broader pool of ad inventory;
• Real-time optimization;
• Smarter targeting;
• Unified campaign reporting across channels and platforms.

How to Choose the Right Ad Server

An ad server can become a powerful tool for both advertisers and publishers, but only when it is applied correctly. If the chosen server doesn’t correspond to your needs, you can’t expect to achieve the desired results. That’s why we strongly recommend you attentively study our practical tips before making up your mind.

Factors to consider

• Type of user. Depending on whether you are a publisher, advertiser, or ad agency, you will need to select an ad server with relevant functionality.
• Ad formats. You need to check whether the ad server under consideration supports your desired ad formats.
• Targeting options. Modern ad servers typically have advanced options like geo-targeting, device targeting, behavioral, and contextual targeting.
• Reporting and analytics. It’s vital to verify that the ad server can provide real-time insights on impressions, clicks, conversions, and revenue.
• Integrations. You need to explore whether the ad server can be connected with other platforms like DSPs, SSPs, and ad exchanges.
• Scalability. Is your ad server able to work stably even during traffic spikes?
• Compliance and privacy. Your ad server must comply with global privacy laws that govern how user data is collected and processed.
• Pricing model. If you are going to use an off-the-shelf ad server, it is necessary to analyze in advance the offered pricing models (CPM-based, SaaS licensing, rev-share). If you want to launch your custom solution, you need to estimate your budget and the required investments.

Best Practices for Using an Ad Server

1. Set up clear goals. You should define KPIs (conversions, clicks, etc.) before starting a campaign. Thanks to this, you will better understand how to adjust your ad campaigns to your needs.
2. Leverage frequency caps. Avoid making your ads too annoying. Don’t show the same creatives to the same users too often.
3. Don’t underestimate the value of A/B testing. Test different creatives, placements, and targeting settings to optimize performance and increase efficiency.
4. Monitor and adjust. Thanks to the regular analysis of reports and dashboards, you can successfully adjust your ad strategy.

Final Word

Today, ad serving platforms play a critical role in ensuring that ads are accurately targeted and efficiently delivered. Strategic use of such platforms is essential for maximizing results for both publishers looking to monetize their ad spaces and advertisers who need to reach the right audience with their offers.

Now, when you have already found the answer to the question “What is an ad server?” and explored the role of this AdTech software, it is high time to start your search for a reliable tech partner who will assist you in the implementation of an ad server. At Geomotiv, we are always at your disposal.