Third Party Ad Serving – What Is It?
Third party ad serving is the technology that pushes ads out to websites and allows advertisers to track the performance of these ads. Almost every banner ad, interstitial, or paid search listing is delivered by or tracked by a third party ad server. Note there are exceptions to the rule, but I won't cover those in this post.
Why do advertisers rely on third party ad serving technology? Accountability. A third party ad server allows advertisers to know how many times an advertisement has been served, the number of clicks associated with the ad, conversions resulting from the ad, etc… Let's say I work for Jim's Flower Pots and we have just launched an e-commerce site. I've been tasked by the CEO to spend $10k as efficiently as possible to generate traffic and more importantly revenue to the site. The CEO has also said that if I can generate $5 for every $1 spent on online advertising, he'll increase my budget to $100k.
I've decided to split my $10k budget evenly among 5 sites. These sites are Google, Yahoo, MSN, BloomsandBulbs.com, and FlowerPower.net. I want to buy search ads (text listings on Google, Yahoo, and MSN) and banner ads on BandB.com and FP.net. I could create text ads for Google, Yahoo, and MSN and have them link directly to jimsflowerpots.com, I could also do the same for the banner ads for BandB.com and FP.net. The problem is how do I attribute traffic and revenue to these advertisements? The publisher can show me the impressions/clicks associated with these advertisements so I can estimate how much traffic each placement drove to our site, but I wouldn't have any direct measurements. This is where third party ad serving comes into play.
I'll break out how ad serving works for search listings and banner ads. For search listings, I can continue to create the copy in Google, Yahoo, MSN, but when it comes down to inserting the destination URL for when people click on the link, I wouldn't insert a URL to jimsflowerpots.com, rather I would insert a URL that looked something like this: tracking.adserving.com/jimsflowerpots/aeeggske.html
The tracking.adserving.com goes to the ad server who then recognizes that traffic is coming through from Google, for the keyword "flower pots," and that it should redirect the user to jimsflowerpots.com. During this redirection process, the ad server has placed a cookie onto my computer that says that I click on the flower pots link on Google. As I visit different pages on the site, the cookie reports information on the those pages, if I end up purchasing an item, the cookie will record that I purchased an item, and other variables like, how much I spent, what items I purchased, etc… Note that the cookie contains NO sensitive information, such as credit card number, name, email address, and other personally identifiable information (if the company follows best practices, which is 99% for the time for established companies).
When I spend money on Google, Yahoo, or MSN, I not only know the clicks associated with each one of my ads, but also the revenue each click generated. Based on this information, I can allocate advertising dollars, to sites and keywords that provide me with the best ROI.
When serving display advertisements on sites like BloomsandBulbs.com, and FlowerPower.net, clicks on ads are tracked in the same manner as the text links. The biggest difference is that with display ads, we track impressions. Each time the advertisement is called from the ad server, the ad server records that an impression was served. Each time an impression is served; the users who see the impression is issued a cookie that says that person say an ad for Jim's Flower Pots on FlowerPower.net. This is where things get a little more interesting.
There is a way of thinking in the marketplace, that people viewing but not clicking on a display ad can be influenced to visit the advertiser’s site and make a purchase (view conversion). This goes along the lines of, you can see a Coke commercial on TV, but there isn't a direct response available to you, you can't call an 800# to have Coke delivered to you, rather they are branding you, so that when you are in the grocery store, you buy cookie. Atlas DMT ran a case study on this issue titled Proving Branding Effect of Web Advertising. How do view and click conversions work together or against each other? This I think will be a key in the coming years as ad serving and conversion attribution becomes more advanced.