Google is taking the wraps off its overhauled ad exchange, which it sees as a key part of the effort to reinvent online display advertising.
The DoubleClick Ad Exchange is designed to operate like the New York Stock Exchange, matching buyers and sellers of online ad space in a real-time marketplace. Buyers, in this case ad networks or agency networks, bid on an impression-by-impression basis for inventory that publishers make available. Google will create liquidity in the exchange by linking it to its AdWords ad system and AdSense publisher platform.
The exchange will compete with others. Yahoo purchased Right Media in 2005, which up to now has been the leader among such services. Microsoft bought AdECN in 2007.
Google paints the effort as part of a broader push to reinvigorate display advertising, which has suffered anemic click rates, low prices and high costs for running campaigns.
“Display advertising, despite the fact that it’s been around for over a decade, is still not living up to its potential,” said Neal Mohan, vp of product management at Google.
The combination of higher-end inventory from DoubleClick publishers and AdSense could make the exchange a leader, said Curt Hecht, president of the VivaKi Nerve Center, a Publicis Groupe digital unit.
“Google is bringing in their long tail of publishers,” he said. “That’s going to give them tremendously more reach and scale.”
VivaKi will have a seat on the exchange, but it also operates a private exchange, built off Google technology, for top-tier publishers to submit their inventory to match up with Publicis’ clients.
Google said “most” of the top 25 U.S. ad networks have seats on the exchange, along with agency groups set up to aggregate audiences.
The exchange and any response from Google rival Microsoft could mean agencies will become less dependent on ad networks as they go directly to exchanges to buy large swathes of Internet ad inventory, Hecht said.
“The big question becomes how many buyers go onto it and how much inventory goes through it,” he said.
Publishers like About.com, News International and Sky Digital Media will contribute inventory to the exchange, according to Google. While many top publishers have complained that trading mechanisms have devalued their ad space, the marketplace should counteract that by providing a truer picture of demand, Mohan said.
“By definition, this is designed to increase the yield of their inventory,” he said.