Google’s Ad Exchange Opens for Business

Google has pulled back the curtain on its DoubleClick Ad Exchange, an important step forward in its grand plan to meld search and display advertising.

For ad buyers and sellers, the launch creates a trading pool for display ad inventory that seems destined to rival Yahoo-owned Right Media — currently the dominant player among exchanges. Hundreds of thousands of AdSense publishers and AdWords advertisers are automatically included in the Google exchange at launch, creating vast demand on both the buy and the sell side. Those large and small AdSense publishers are joined by major publishers who use DoubleClick’s DART for Publishers platform for ad serving and yield optimization, and others Google has struck individual relationships with.

One of the platform’s key features is the ability for ad networks and agency buyers to bid on inventory in real-time, letting them zero in on impression attributes such as geographic location or the presence of advertiser cookies before placing a bid. Yahoo’s Right Media ad exchange does not currently offer bidding in real-time, though it is available through some smaller ad marketplaces.

“It’s pretty big news for the industry to get real-time bidding on such a large pool of inventory,” said Matt Spiegel, CEO of OMG Digital. “Ultimately this is about getting more transparency and visibility on the buy side, and also taking more control.”

The exchange has long been in the works, and indeed has recently enjoyed heavy trading activity by publishers, agencies, and ad network buyers. Spiegel said it’s already a significant source of inventory for OMG Digital, which has been using it for about five months. In some cases it’s the largest source.

Spiegel added, “We are turning more and more to the exchanges over time, and ultimately at the cost of the ad networks,” in particular horizontal networks.

Even so, ad networks represent an important constituent for the exchange, and Google has taken steps to ensure it’s hospitable to them. In addition to getting real-time bidding, ad networks and agencies can bring their own ad serving and tracking tools — a key feature and one some had wondered about, given DoubleClick’s ad management products. Also, Google says it has streamlined invoicing and billing, making payments relatively transparent for “thousands of publishers and thousands of advertisers.”

Neal Mohan, VP of product management and captain of Google’s display ambitions, called the exchange “a major milestone in Googles’s display ad vision.”

“We want to democratize access to display advertising and make it as acceptable and open to all participants as search,” he told ClickZ yesterday. “Just as quickly as you can get a test campaign up and running on search…you can get a display ad running across a number of display ad networks in a number of minutes.”

Mohan emphasized the controls available to publishers and ad buyers. Larger publishers using DoubleClick’s for ad serving and yield management will be able to automate decisions about whether to sell in-house or through the exchange by setting up base-level CPMs that would trigger an exchange sale.

Meanwhile smaller publishers participating in the exchange through AdSense will be able to control their involvement through the AdSense interface.

Mohan pointed out small- to mid-sized advertisers that may lack creative resources to build banners can use Google’s Display Ad Builder product, which launched a year ago as an AdWords feature. According to Mohan, their experience of the exchange will be no different than it is for display ads placed through the existing Google Content Network.

“It’ll be seamless,” he said. “They will continue to buy on the content network. Now it turns out some inventory they didn’t previously have access to will be included.”

Exchange rival Right Media said in a statement it hoped to work with new exchanges entering the market.

“The industry will be well served if all exchanges embrace the values we cherish, and will help promote rather than restrict the spirit of openness and the resulting transparency and liquidity of supply, demand and data in the industry,” it said.

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