NEW YORK (AdAge.com) -- Google is opening its own display-ad exchange today in a bid to bring the technological approach derived from its search-advertising success to the display ad market.
The DoubleClick AdExchange is a rebuild of DoubleClick's old exchange using Google's technology and the first big product launch out of the search giant's $3.1 billion acquisition of the company, completed in 2008.
The new system, under wraps and in testing mode for months, is key to making that acquisition pay off for Google and to helping it take a bigger bite out of the unruly display ad market, which Google has found difficult to tame.
Google's search market matches ad buyers and ad impressions in real time, based on advertisers' bids and a set of targeting criteria. The AdExchange works similarly, but for display advertising. It also includes integration with Google's search ad-sales system, with the idea that it will let search advertisers move money more easily to display and vice versa. In addition, all of Google's network inventory will be available as part of the exchange, not just sites that use DoubleClick for ad serving.
Easier to buy
"Our view is display looks more and more like search every day," said Curt Hecht, president of the VivaKi Nerve Center, part of Publicis, a customer of Google's platform. "AdExchange makes it easier to buy without making a lot of calls to publishers or working with a lot of ad networks."
In general, an ad exchange is real-time stock-market-type system in which ad networks and publishers that have ad inventory they need to sell can post it to the auction and other networks and publishers that may be in need of that particular kind of inventory can buy it. Advertisers can also buy directly. The inventory is bought and sold in the form of ad impressions.
The online display-ad world has consolidated into three major exchanges, the biggest being Yahoo's Right Media, which has inventory from many major newspaper sites as well as Yahoo's own ad inventory.
Microsoft also runs an exchange, Microsoft AdCenter, and there are independent exchanges, such as ContextWeb's Adsdaq. Other trading systems sit between the publishers, ad networks and exchanges, such as Rubicon Project, MediaMath Turn and Datazoo.
Google says ad inventory available in the system will reach 76% of U.S. audiences and 73% of international audiences. Some major ad networks also plug into the system, such as Tribal Fusion, Adconion and Collective Media.
Google's VP-product development, Neal Mohan, said 40 ad networks are participating, including "most" of the 25 largest in the U.S. Google believes that display advertising, like search, would benefit from a more transparent, simplified marketplace.
"Display advertising is still not really living up to its full potential," Mr. Mohan said. "From our standpoint, Google is focused on growing the display business for ourselves but the means to do that is to grow the pie for everybody."
Publishers resist any effort that might take away their pricing power or make their ad space a commodity. But advertisers want to be able to buy scale easily -- like they do with TV -- while layering on all the targeting and analytics possible via the web.
"The more we can access inventory in real time and bring our own targeting to the table, the more we can provide value to our clients," said Matt Spiegel, CEO of OMG Digital, whose clients include HP, Visa, Intel and Pepsi.
The question is whether the market will accept Google as a neutral arbiter of display ad dollars anymore than it does Yahoo or Microsoft, or if the exchange will be viewed as competitive by WPP, against which it competes in ad serving, or AOL, which operates Advertising.com. A big part of what the exchanges do is trade impressions with one another.
"We welcome these exchanges, and look forward to working with them and integrating with them for our partners," Frank Weishaupt, VP-advertising marketplaces at Yahoo, said in a statement.
Others had doubts as to whether a more robust Google exchange will have an impact. Mike Cassidy, CEO of Undertone Networks, said that most of the ad inventory publishers put into exchanges is already transacted there, so there's a question as to whether it will grow the pie.
Further, he said, "publishers are better off selling through multiple channels than one transparent channel at lower rates."
Includes 'long tail'
Google's Mr. Mohan said the exchange will allow publishers to accept bids for their premium placements as well as remnant inventory. It will also bring in so-called long-tail inventory in the AdSense network, mainly smaller sites that don't have a sales force but grouped together have significant scale. This fits into Google's view that, like search, the display ad market is much, much bigger than just the biggest publishers and top advertisers.
"Eventually Google is going to figure it out but I don't think we are going to see a big shift in the market," said Frank Addante, CEO of ad optimizer Rubicon Project. "Most of the dollars being spent with Google today is with text, and the top publishers on the web don't use Google."