Google's New Ad Exchange System

This semester, I am not only taking Business of Media, but also Intro to Marketing at Stern. Even though I am a Media and Communication Studies major, I am very interested in a career centered upon marketing and advertising. I hope that through this blog that I will be able to learn more about the business and economics of the media saturated world that we live in, as well as explore my growing interests in marketing.

I recently read an article from adweek.com entitled, "Google Upgrades Ad Exchange," discussing Google’s reinvention of online advertising. It’s fascinating that our society is obsessed with advertising that appears everywhere from billboards to magazine spreads, but I haven’t noticed much of a dialogue regarding the strategic importance of Internet advertisements, despite the fact that Americans continue to spend more and more time connected to the Internet. In fact, according to a Pew Internet survey conducted in April 2009, 56% of Americans have at one point accessed the Internet from a mobile source, such as from a laptop or cell phone. As we literally carry the Internet in our pockets, the content of the sites we browse online become even more prominent in our lives and this must have some correlation to our exposure to online advertising. I would like to possibly investigate such a theme throughout the semester and as I write this blog.

This article from adweek.com caught my attention because it addresses the reinvention of online advertising. Recently, ad campaigns online have often been very expensive, but the ads have very low click rates. To rejuvenate this system of advertising, the DoubleClick Ad Exchange, will measure the effectiveness and value of an online ad campaign with real-time bidding, ensuring that launching ads matches the preferences of those who will view them. The New York Times actually describes it as a stock market, “where advertisers and publishers can buy and sell advertising space, filling spots in Web pages on the fly.” Google’s new partnership will compete with Yahoo!, which purchased Right Media in 2005 and Microsoft’s AdECN, purchased in 2007.

This strategy of real-time bidding will both successfully reach target audiences and boost company inventory without wasting revenue on ads that will never even be clicked on. While this seems like a reasonable plan, however, the purchase of ad space online in response to niche audiences doesn’t seem like anything new. Progress on this will enable us to see how the DoubleClick Ad Campaign really sets itself apart from other systems in the purchase and sale of online advertising space.