Google Sept. 18 went after the market for online display advertising with full force, opening the new DoubleClick Ad Exchange to tackle market leader Yahoo.
DoubleClick Ad Exchange, which has been rebuilt with Google's technology and is backed by Google's infrastructure, is a marketplace where prices are set in a real-time auction for display ads, or graphical ads on Websites that catch people's attention.
Real-time bidding lets ad networks use their own technology to bid on an impression-by-impression basis. The Exchange generates online publishers the biggest return for every impression by allocating ads to the highest-paying sales channel on the fly.
Google, which fought hard to get antitrust approval before buying DoubleClick for $3.1 billion in March 2008, has major online publishers in mind to help it sell ads via the Exchange, including newspapers, large portals, and entertainment and branded sites. Moreover, ad real estate on Google's third-party AdSense publisher sites is being made available through the new Ad Exchange.
On the buy side, Google said more than 40 ad networks across North America and Europe will connect Websites with the advertisers through the Exchange. Also, AdWords advertisers will be able to run ads on sites in the Ad Exchange, using their existing AdWords interface.
Display ads come in image, interactive or video form, often appearing on Web pages to the right of content Web surfers have searched for online. The ads show products and services that are usually relevant to the content with which they are displayed.
These ads are geared to help advertisers boost sales. Websites and online publishers host these ads to get a cut of the ad revenue to pad their own coffers. Companies such as Yahoo, Google, Microsoft and AOL serve the ads with their platforms, taking an undisclosed cut of the ad revenues. Neal Mohan, vice president of product management at Google, explained in a blog post the challenge Google is trying to address with the Ad Exchange:
""With a multitude of display ad formats, and thousands of Websites, it often takes thousands of hours for advertisers to plan and manage their display ad campaigns. With this complexity, lots of advertisers today just don't bother, or don't invest as much as they would like. On the other side of the equation, some publishers are left with up to 80 percent of their ad space unsold. It's like airlines flying with their planes mostly empty. And for the ad space that they do sell, publishers also have to deal with the complexity of managing thousands of advertisers and campaigns... Better technology can help make display advertising work better for all involved. We're focused on growing the display advertising pie for everyone. The DoubleClick Ad Exchange is a major part of that goal.""
Claims of trying to make the pie larger for everyone sound very altruistic, but Google had eyed Yahoo's 20 percent-plus market share in display ads with envy for several years. Google has been the king of contextual search ads for a decade, but it has failed to figure out the display ad puzzle.
comScore said the search giant tallied (WSJ paywall) only 1.3 percent of display ad views in March 2009.
For its part, Yahoo said it welcomes Google's competition, but internally it can only be viewing Google's Ad Exchange with wariness. Next to its massive visitor and user base, display advertising ranks as Yahoo's most prized asset.