Google has made billions from its dominance of the paid search market. Not only in sponsored ads in its own search results, but also in allowing web publishers to run these ads on their respective sites, as well. In fact, the ease of use for the technology created an entire sub-genre of spam sites commonly referred to as MFA (Made for AdSense) sites.
Google acquired DoubleClick for more than $3 billion in March 2008, in hopes of supplementing its lucrative business serving text-based ads alongside search results with the more visual display ads used in corporate branding campaigns — a market dominated by online rivals Yahoo Inc and Time Warner’s AOL.
Thursday’s announcement by Google will for the first time combine the DoubleClick exchange with its own advertising system and technology. Ad exchanges, like a stock market, is where advertisers and publishers can buy and sell advertising space, filling spots in Web pages on the fly. Ad exchanges have become increasingly prominent as publishers look for new ways to monetize their traffic.
Google’s CEO, Eric Schmidt, has repeatedly stated that display advertising is one of the company’s best prospects for expansion, now that growth in its text ad business has slowed significantly. The new advertising exchange is a cornerstone of Google’s display strategy and one of the main reasons Google purchased DoubleClick.
This will likely be a long fight for all parties involved. Google, for once, is facing an uphill battle as an underdog in the display and exchange biz. Yahoo is king right now, being one of the web’s biggest publishers and seller of ads on hundreds of newspaper web sites.
But there are signs that there may be cracks in the crown as eBay is currently testing Google’s contextual ads on its US site and is considering running them instead of ads it currently carries from Yahoo, Goldman Sachs analyst James Mitchell reports. According to Mitchell, the really bad news for Yahoo is that eBay’s switch might just be the first of many to go in a series of defections that could ultimately cost Yahoo $1.5 billion in gross revenues each year.
But the only thing certain in the internet marketing world is uncertainty. And that’s what makes it fun. So fear not, we’ll be here to provide our viewpoint on all things digital, particularly around search.
For further reading, please check out the DoubleClick blog announcement post: Announcing the New DoubleClick Ad Exchange
