September 18, 2009
Google Opens DoubleClick AdExchange
Google is taking a page (and likely, some profit) from Yahoo!'s playbook. Late yesterday, Google announced it would open an Ad-Exchange, sort of a commodities market for display advertising, for its DoubleClick acquisition. Much like Yahoo!'s Right Media Exchange, DoubleClick's Ad-Exchange will allow advertisers to bid on unused advertising space (inventory) made available by participating web publishers. The bidding and buying takes place in real time with Google handling ad-distribution and billing. By opening a DoubleClick Ad Exchange, Google closes the circle on its advertising distribution business. Google has several advantages over its rivals Yahoo!, AOL and Microsoft entering the display exchange marketplace. Currently, Google virtually owns the text-ad sector with Google AdWords advertising. It will now apply the same enormous weight of distribution power to the display business. For web publishers and advertisers, the advent of a DoubleClick Ad-Exchange will likely lead to increased inventory and profits coupled with an easy to use, one-stop-shop system. For other publishers and distributors of display advertising however, Google's entrance in this market might become extremely problematic. According to Google, the DoubleClick Ad-Exchange will:
1/ Simplify the system for buying and selling display ads to help advertisers and publishers mange their campaigns and ad formats. 2/ Deliver better performance that advertisers and agencies can measure to figure out what is working and what is not. 3/ Open up the ecosystem. (Google notes that 80% of clients using its new AdBuildier product are first-time display ad buyers)Points #'s 1 and 2 are most certainly correct. The third point, about the new Exchange opening the ecosystem might be a bit of a stretch. Given Google's lock-hold on the text-ad market and the assumed ease of display ad integration for AdWords clients and AdSense publishers, it is very likely that the DoubleClick AdExchange could have the exact opposite effect of limiting competitors' ability to compete. Google has opened an ocean of previously unused real estate for advertisers and a firehose of advertising content for publishers. Time will tell how the DoubleClick AdExchange affects competing business models.