What Happened:
DoubleClick, the online advertising company that Google purchased for over 3 billion (after outbidding Microsoft) has just launched the “DoubleClick Ad Exchange.” This new product creates a real time exchange to connect both parties in display advertising. It improves the online advertising process for both the publishers and ad buyers, by connecting them in a single location with a bidding auction, increasing access to publishers, and giving purchasers more control over their purchases.
Buying advertising space has long been messy, and to sell it was always opaque. With the DoubleClick Ad Exchange, Google is trying to fix both problems, and make money at the same time.
The So What:
Google is increasing the size “marketing pie,” they claim by making sure that more total inventory is purchased. If they can ensure that a higher total percentage of the open pageviews are purchased, then the total ad dollars spent will rise. Of course, this assumes that remnant-type networks expanding to fill some of this void do not so aggressively undercut pricing elsewhere, that indeed they lower the total market prices.
This move shows that Google wants to dominate much, much more than the search advertising space. The Ad Exchange is for all display advertising, and Google now has the best technological platform in the world. They built it, and everyone is going to come. Of course, small publishers will still struggle somewhat to be heard in the noise, but with the new market based on quick pricing and purchase decisions, smaller publishers with quick-acting teams should be able to grow their revenues and lower remnant pageviews.
What We Think:
Brilliant move by Google. It is great to see them keep the DoubleClick brand intact (for the time being), and build it with Google technologies, to make a significant change in the world of online display advertising. Still, this product is so nebulous, we will have to wait perhaps a quarter see how its adoption goes. For now, it is a strong move by a large player in a large and growing space to assert dominance. We love it. Your move, Mircosoft.
