Google’s New Ad MarketPlace for DoubleClick: Advertising Paradigm Shifts

What Powers Google, financially, to run world’s biggest Search engine, Email service, ad other Apps? Simple: Advertising. Google Adsense/Ad words till date, was the sole major contributor of earnings for Google that gives Google power to make most of it’s products free for the end-users and still able to result in profits worth billions of dollars. Highly Relevant, targeted text ads appear on Google search and 3rd party websites that are part of the AdSense program.

Typically, advertisers buy ads based on keywords, with more popular keywords costing more per click than less popular terms.

This strategy, so far, had been going only with text ads, not banner or image display ads. But speculation had brought evidence that Google would apply its unique and lucrative ad model to display ads after its $3 Billion DoubleClick acquisition.

Now, the speculation has phased into Reality. Google has launched the DoubleClick Ad Exchange, and it is just like AdWords and AdSense, except that it is a marketplace for display ads. Sounds interesting.

Here is what Google said in its announcement at their blog:

“We’ve been working hard to put these principles into practice, and today we’re excited to announce the new DoubleClick Ad Exchange, a step towards creating a more open display advertising ecosystem for everyone. The Ad Exchange is a real-time marketplace that helps large online publishers on one side; and ad networks and agency networks on the other, buy and sell display advertising space.

These publishers and ad networks manage and represent large volumes of ads and ad space from lots of advertisers and websites. By bringing them together in an open marketplace in which prices are set in a real-time auction, the Ad Exchange enables display ads and ad space to be allocated much more efficiently. This improves returns for advertisers and enables publishers to get the most value out of their online content.” …

1. Simplify the system for buying and selling display ads

2. Deliver better performance that advertisers and agencies can measure

3. Open up the ecosystem

The small-time advertiser or relevant business can now buy targeted display ads on thousands of DoubleClick ad-serving websites. This could have some major repercussions on the entire web. Some possibilities:

– It could significantly increase Ad revenue for Google, as a highly targeted ad marketplace encourages people paying more for the ads they want to serve.

– It increases Google’s competition with Yahoo, the current leader in display advertising, and even Bing.

Google has a PDF detailing the Ad Exchange, and a video overview:

via Mashable