Do We Still Need Third-Party Ad Servers?

marcuspratt“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Marcus Pratt, director of insights and technology at Mediasmith.

The third-party ad server provides an enormous benefit to the digital media industry, while creating significant value in the ad-tech space as well. This was illustrated by Microsoft’s $6.4 billion acquisition of aQuantive, which included the Atlas ad server, DrivePM and Avenue A/Razorfish, in 2007 and Google’s $3.1 billion acquisition of DoubleClick in 2007.

Third-party ad servers are still widely used today, viewed by many agencies and advertisers as a vital ingredient in an online campaign. Certainly, the need to serve ads is not going away, but I question the role for today’s ad server in tomorrow’s evolving digital landscape.

Do we really need third-party ad servers anymore? To answer that question, it is helpful to look at how the ad server is used today.

While there are many useful features, the ad server serves two important purposes:

  1. They deliver impression counting that buyers and sellers accept.
  2. Ad servers provide buyers with unified reporting and deduplicated conversion tracking.

In the early days of digital advertising, it was extremely important to have one set of numbers to use for billing. The ad server created trust between buyer and seller through unified counting, making it possible to buy across multiple sites using standard terms and conditions.

It was – and still is – important to have unified reporting across a campaign. Without the ad server, direct response advertisers couldn’t allocate credit for view-through conversions, while brand advertisers couldn’t measure reach or frequency across a campaign.

These core uses are still very important. Key shifts in our industry, however, may change the way media is purchased and optimized, reducing dependency on the ad server in the process. The main factors driving these shifts are viewability and attribution.

The Impact Of Viewability

The industry still works through technical and business challenges around transacting on viewable impressions, paying only for ads that are at least 50% visible on-screen for at least one second, but many see viewable impressions as a standard display metric in 2014. Some media companies already sell viewable impressions as guaranteed by one of the MRC-accredited vendors and more will likely follow.

This shifts proof of performance from the ad server to the viewability vendor. In a world where advertisers pay vendors based on viewable impressions, total impressions may not be needed from a third party.

Applying An Attribution Model

Many advertisers treat multitouch digital attribution as a high priority. Moving from a last-touch method of providing credit to a custom model often involves bringing in a specialized solution provider to analyze each touch point of a campaign and assign partial credit for sales or other actions.

This can be done by tagging creative or analyzing log-level data collected from the ad server, but in either case, the result is the same: The attribution solution provides performance data, diminishing the importance of the ad server in reporting.

Where Does The Ad Server Fit In Tomorrow’s Digital Landscape?

If today’s ad servers provided viewability tracking and custom attribution models, they may retain an important position in the ad-tech ecosystem. Certainly, at least some are moving toward these offerings now, but ad servers may have trouble creating features that compete with pure-play solutions. Several categories recently emerged that could have been ad-server features:

  • Tag management: DoubleClick created Floodlight tags before the Google acquisition and still uses them today. These tags track conversion events and act as container tags, allowing advertisers to place tracking code from other vendors without a need to edit HTML directly, but they are by no means tag-management solutions. Several companies, such as BrightTag and Tealium, have sprung up to help advertisers manage the flow of data and use of tags on websites. Google recently developed smarter tags under the AdWords stack, but these do not replace DoubleClick’s Floodlight tags. Ad servers were often the master technology for tracking conversions and passing data to vendors, but new tag-management technologies have superseded the ad-server capabilities and relegated ad-server tracking code to just another vendor pixel.
  • Verification and Privacy: Advertisers routinely employ third parties to ensure ads run in brand-safe environments and are OBA compliant. Doubleverify, Evidon, Integral Ad Science and others built businesses on these needs, while some of the ad servers now provide more limited solutions to ensure brand safety. Although agencies and advertisers often prefer to work with few vendors, the ad server’s lack of functionality requires them to work with multiple parties, even for something as straightforward as informing consumers they are being targeted.

Google, owner of one of the largest ad servers – if not the largest – is making progress to address both viewability and attribution, but these products may not be enough. The viewable impression product initially focuses on measuring viewability for Google AdX and AdWords inventory, but is not available within the DoubleClick product. This is certainly a start, but advertisers seeking to transact on viewable impressions will want measurement across an entire buy.

On the attribution side, Google provides more and more data, along with tools to analyze the impact of multiple touches in Google Analytics and Doubleclick on a campaign, but these too are limited. To see all search and display efforts in a single platform, advertisers must use the Doubleclick Search tool, which brings search data into the ad server, or sign up for Google Analytics Premium, which brings display data into Google Analytics. If these steps are taken, advertisers will find themselves largely on their own for analysis and development of an attribution model, so many are looking to pure-play attribution solutions to help them sort this out.

They are a vital part of the digital ecosystem, but it is not impossible to visualize a world without the third-party ad server as we know it. Ad servers must evolve to maintain a position of importance.

But will they? Can the ad server adapt or will it become part of a legacy, commoditized technology stack?

Follow Mediasmith (@MediasmithInc), Marcus (@mawkus) and AdExchanger (@adexchanger) on Twitter.

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  1. Marcus – thanks for your article about 3rd party ad servers. The ad-tech ecosystem has definitely evolved many point solutions for different needs, but I argue that the ad server is still a vital hub for marketers.

    Couple of important functions that 3rd party ad servers provide which weren’t covered in this article:
    1. Business rules for creative delivery: Ad servers provide numerous tools to dictate which ads will be served based on a variety of conditions: geo targeting, contextual targeting, retargeting, device type, browser settings and internet connection speed. Managing this through targeted placements (premium) or a DSP (exchange) automatically reduces the campaign’s overall reach. By purchasing more generic media and using the 3rd party ad server to customize creative maximizes reach and can lower media costs.
    2. Creative authoring capabilities: All ad servers provide numerous tools for building ads in various formats and sizes. Both Mediamind and Doubleclick have tools for quickly building Flash, HTML5 and VPAID ads. These tools are essential for quick time-to-market of campaigns.
    3.Global campaign capabilities: More and more global advertisers seek to execute and report on campaigns across multiple regions. There are frequently unique challenges to data ownership, permissions and access, and coordination that only a 3rd party ad server can handle
    4. Dynamic Creative: Running a campaign with hyper-targeted creative decisioning, authoring and optimization (based on KPIs chosen by an agency) across multiple premium and exchange placements is best suited for a 3rd party ad server. Point solution providers offer this, but frequently these types of campaigns are run in conjunction with upper-funnel marketing campaigns. The 3rd party ad server is the logical place to coordinate all this activity.
    5. Planning & Buying: Most ad servers today provide streamlined RFP and IO management capabilities for premium guaranteed buys. These tools are directly integrated with ad operations and trafficking capabilities.
    6. Asset Management: 3rd party ad servers provide tools for organizing, categorizing and re-using ads across campaigns

    In recent years, ad servers have also incorporated the items you listed in your article. Brand safety and audience verification, viewability, and tag management are available in Doubleclick, Mediamind, PointRoll and other 3rd party ad servers.

    3rd party ad servers have offered various levels of attribution for some time and are continuing to invest in multi-channel attribution. Atlas, for example, had 4-5 sophisticated attribution models for a number of years, yet agencies never used anything more advanced than last-click.

    For years, 3rd party ad servers have been the source of truth for agencies and advertisers. As our industry consolidates I believe we need 3rd party ad servers more than ever.

    Michael Lamb
    Director, Product Management