211. Online Advertising › how it works › advertising networks and advertising exchanges The advertising network acts as an intermediary between advertisers and publishers, and provides a technology solution to both. As well as providing a centralised ad server that can serve adverts to a number of websites, the networks offer tracking and reporting, as well as targeting. Advertising networks usually categorise the sites by channel. Advertisers pay to advertise in specific channels, and not in individual sites. Most times, the campaign will then be optimised based on the best converting sites. Rates are often negotiated with the network, and placements are booked over a period of time. Advertising exchanges, on the other hand, are where unsold inventory is placed by publishers for bidding. The inventory is sold to the highest bidding advertiser. Giving advertisers far more control, this type of advertising mimics a PPC based model of paid search bidding (Generalised 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. 8.4.5 Ad Servers Ad servers are servers that store advertisements and serve them to web pages. Ad servers can be local, run by a publisher to serve adverts to websites on the publisher’s domain, or they can be third-party ad servers, which serve adverts to web pages on any domain. Ad servers facilitate advert trafficking and provide reports on advert performance. 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 advert 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 re-contact the vendors. This is referred to as third-party ad serving. The ad servers provide a wealth of data, including impressions served, adverts clicked, CTR and CPC. Whilst publishers have their own ad servers, most of the third-party ad servers also have the ability to provide performance against post-click activities such as sales, leads, downloads, or any other site-based action the advertiser may want to measure.208