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3.5 Ad Servers and Advertising Networks

Learning Objectives

  1. Learn what ad servers are and what their role in advertising is.
  2. Learn what advertising networks are and why they are effective.

Ad serversThe delivery of ads by a server to an end user’s computer on which the ads are then displayed by a browser or cached. Ad serving is normally performed either by a Web publisher or by a third-party ad server. Ads can be embedded in the page or served separately. are servers that store advertisements and serve them to Web pages. Ad servers can be local, run by a publisher to serve advertisements to Web sites on the publisher’s domain, or they can be third-party ad servers that serve advertisements to Web pages on any domain. Ad servers facilitate advertisement trafficking and provide reports on advertisement performance.

An advertising network is a group of Web sites on which advertisements can be purchased through a single sales entity. It could be a collection of sites owned by the same publisher (e.g., AOL, CNN, and Sports Illustrated are all owned by AOL/Time Warner), or it could be an affiliation of sites that share a representative.

The advertising network acts as an intermediary between advertisers and publishers and provides a technology solution to both. As well as providing a centralized ad server that can serve advertisements to a number of Web sites, the networks offer tracking and reporting, as well as targeting.

The Benefits of Ad Servers

Rather than distribute copies of each piece of creative advertising to each publisher or media buyer, you can send out a line of code that calls up an advertisement directly from the ad server each time an advertisement is scheduled to run. The agency loads the creative to the server once and can modify rotations or add new units on the fly without needing to recontact the vendors.

The ad servers provide a wealth of data, including impressions served, advertisements clicked, click-through rate (CTR)The number and percentage of recipients who clicked on a particular uniform resource locator (URL) included in an e-mail, a Web page, and so on., and cost per click (CPC). Most of the ad servers also have the ability to provide performance against postclick activities such as sales, leads, downloads, or any other site-based action the advertiser may want to measure.

Ad servers provide a consistent counting methodology across the entire campaign enabling the advertiser to gain an “apples to apples” comparison of performance across the entire media schedule, which includes multiple Web sites.

The ad server also allows sophisticated targeting of display advertising.

Tracking

The trackability of online advertising is what makes it so superior to pasting pictures around town in a bid to boost your brand. An advertiser can tell not only how many times an advertisement was seen (impressions) but also how many times the advertisement was successful in sending visitors to the advertised Web site (clicks). The tracking needs to continue on the Web site to determine how successful the advertisement has been in creating more revenue for that Web site (conversions).

As well as tracking advertisements being served and clicked on, advertising networks can also provide information about the people who saw the advertisement as well as those who acted on it. Here is some of the information that can be provided:

  • Connection type
  • Browser
  • Operating system
  • Time of day
  • Internet service provider (ISP)

Why do you think knowing the connection type and browser of your users is important? Think about the advertising that might be shown in the United States versus the advertising shown in South Africa.

Many ad servers will set a cookie on impression of an advertisement, not just on click-throughA click on a link that leads to another Web site., so it is possible to track latent conversionsWhen someone comes to your Web site through an ad campaign, leaves the site, and then comes back later (by another paid click, an organic click, typing in your uniform resource locator [URL], a bookmark, or something else), and then converts. (within the cookie period).

And the best thing? Using this information, the advertising networks can target the display of advertising, helping advertisers optimize campaigns and get the most from the advertising spending.

Cookies are small text files that allow a Web site to capture information about a user. A cookie period is the duration for which a Web site will store that information. See Chapter 4 "Affiliate Marketing" for a description of cookies.

Targeting and Optimizing

Advertising networks serve advertisements across a number of Web sites and can track a user visiting Web sites in the network using cookies or Internet protocol (IP) addressesUsed to uniquely identify a computer and system on the Internet.. This means that advertising networks can offer advertisers the following:

  • Frequency cappingThe number of times an ad is delivered to the same browser in a single session or time period. A site can use cookies in order to manage ad frequency.. The network will limit the number of times a user sees the same advertisement in a session.
  • SequencingThe network can ensure that a user sees advertisements in a particular order.. The network can ensure that a user sees advertisements in a particular order.
  • ExclusivityEnsure that advertisements from direct competitors are not shown on the same page.. The network will ensure that advertisements from direct competitors are not shown on the same page.
  • RoadblocksAllowing an advertiser to own 100 percent of the advertising inventory on a page.. The network will allow an advertiser to own 100 percent of the advertising inventory on a page.

Privacy is a big deal, and the information collected via advertisements is kept anonymous. Cookies are not only used by Web sites for tracking. Cookies also allow Web sites to “remember” a visitor’s preferences, such as language and location. Where a visitor will not accept the cookie from an advertising network, either by opting out or because their browser deletes cookies, many networks will rely on the IP address of the visitor to track which Web sites are visited. Even though the information is anonymous, there are consumers who do not like having their browsing habits analyzed so that better advertising can be served to them.

The advertising network can also target advertisements based on the business rules of the advertiser or based on the profiles of the users:

  • GeotargetingOnline advertising has the ability to target markets by country, province, state, city, or zip code and can even drill them down to something as specific as their Internet protocol (IP) address.. Online advertising has the ability to target markets by country, province, or city and can even drill them down to something as specific as their IP address.
  • Operating systemsOperating systems such as Microsoft Windows, Mac OS, Linux, and Ubuntu can be used to target markets. and browser typesBrowser types such as Firefox, Internet Explorer, and Safari can be used to target markets.. Markets can further be targeted via operating systems such as Microsoft Windows, Mac OS, Linux, and Ubuntu or browser types such as Firefox, Internet Explorer, and Safari.
  • Connection typeUsers can be segmented and targeted according to their Internet connection type, for example, whether they use broadband or dial-up connections.. Users can be segmented and targeted according to their Internet connection type, for example, whether they use broadband or dial-up connections.
  • Day and timeAdvertisers can choose the time of day or day of the week when their advertisements are shown.. Advertisers can choose the time of day or day of the week when their advertisements are shown. Advertisers can specify when their campaign should air, down to the minute. This usually depends on the client’s objective for the campaign or the product itself.
  • Social servingWeb sites gather personal data about users and then serve each user with targeted and relevant advertising.. Web sites gather personal data about users and then serve each user with targeted and relevant advertising. For example, Facebook will allow advertisers to select specific characteristics of users who will be shown an advertisement.
  • Behavioral targetingThe advertising network uses the profile of a user (built up with information about previous Web sites visited) to determine which advertisements to show during a given visit. Networks can base this profile on cookies or on Internet protocol (IP) addresses.. The advertising network uses the profile of a user (built up with information about previous Web sites visited) to determine which advertisements to show during a given visit. Networks can base this profile on cookies or on IP addresses. For example, the network may choose to show advertisements for pet insurance on a news page to a user who has visited the pets and animals section of a general-media site previously.
  • Contextual advertisingThe ad server infers the optimum advertisements to serve, based on the content of the page.. The ad server infers the optimum advertisements to serve, based on the content of the page. For example, on an article about mountain bike holidays in Europe, the network would serve advertisements for new mountain bikes, or advertisements from travel companies offering flights to Europe, or perhaps advertisements for adventure travel insurance.

Contextual advertising can be problematic. For example, advertisements for a Hilton hotel could appear next to newspaper reports of a Paris Hilton arrest. Advertisements for yachts showed up next to coverage of Hurricane Katrina in New Orleans.

Figure 3.4

Contextual advertising can be humorous.

Advertising Exchanges

Advertising networks are also creating advertising exchanges, where publishers can place unsold inventory for bidding. The inventory is sold to the highest bidding advertiser. Giving advertisers far more control, this type of advertising mimics a pay-per-click (PPC) model of paid search bidding (generalized second price auction)—but bids are for audience profiles and space rather than for keywords. It allows publishers to fill unsold inventory at the highest available price and can give smaller advertisers access to this inventory.

Key Takeaways

  • Ad servers and ad networks provide trafficking, tracking, and reporting solutions to both advertisers and publishers. They allow advertisers to target display advertisements based on parameters, which include the following:

    • User profile (location, operating system, browser, and connection type)
    • Behavior
    • Frequency and sequencing
    • Exclusivity
    • Context of content
  • Tracking via cookies is an important part of online advertising.

Exercises

  1. Explain the role an ad server plays in a campaign. Why is it important? What may happen if there isn’t an ad server?
  2. Describe a situation in which contextual advertising would be harmful to a campaign.
  3. Can you think of an example when an advertiser may find geotargeting useful? What about targeting by day and time?