It's been eighteen months since Google bought ad exchange DoubleClick for 3.2 billion U.S. dollars. The purpose was to give Google a foothold in the market for banner and video ads, and expand its revenue base. The intrinsic value of DoubleClick was the tool to sell and display graphical ads.
There are still search ads sold through AdSense and AdWords for 95 percent of Google's annual revenue of around 22 billion dollars. Yahoo has probably earned more on its purchase of Right Media - also in 2007, for 526 million U.S. dollars-that operate under the same principles as DoubleClick, which they partly used frequently on its own very comprehensive content commitment. In the U.S., Microsoft has also distinguished himself with his own stock market for banner ads.
In his analysis of the U.S. market for online ads, "states the Interactive Advertising Bureau that in 2008, was traded search ads for 10.5 billion U.S. dollars, and banner ads for 7.6 billion U.S. dollars.
Today Google is launching a new integrated ad exchange for both search ads and banner and video ads: DoubleClick Advertising Exchange.
This ad exchange, offers advertisers and agencies a variety of tools to coordinate search and banner ads, to target their campaigns geographically or to defined target audiences, and to control pricing. It is also possible for content providers to use the exchange to be sold free ad space more efficiently and at higher prices, because DoubleClick Ad Exchange operates in real time and provides tools to customize your ad placement and targeting.
Moreover, providing ad exchange, advertisers are able to monitor marketing campaigns and measure results.
The consequence is, according to Google, the market for banner ads is expanded greatly. Statements from the company's management is that banner advertising has a huge untapped potential. (Vice President Neal Mohan is referred to in all, from Reuters to Business Week.)
It warned that Google's profits on banner ads will remain relatively modest in the foreseeable future, partly because the company takes very little pay per click banner advertising, partly because it will take time for advertisers and agencies to find out how the combined exchange for banner and search ads can be exploited efficiently.
Among the factors that speak to Google's advantage is that many content providers already have a customer relationship with DoubleClick, and that the combination of DoubleClick, AdSense and AdWords provides a huge customer base.
Google envisions that the ad exchange can provide more revenue for content providers that can guarantee the display against limited audiences: Advertisers may be more interested in paying such as 100 per thousand impressions if the audience is limited as they wish, over 50 per thousand impressions to a more undefined audience. It is precisely this that is the purpose of the software that controls the new ad exchange, and that it therefore has taken eighteen months to program and arrange for Google's infrastructure.
Google ensures that the user information collected through ad clicks will be kept strictly separate from the user information collected through Google's other services, like search and e-mail.
Microsoft has been unwilling to comment on Google's new release. Statements from Yahoo is that they consider the market for banner ads that are fragmented, and that they look forward to more competitions can help to make the market bigger.
