Google Offers Real-Time Bidding On DoubleClick Ad Exchange
- by Laurie Sullivan @lauriesullivan, September 18, 2009
Google has rebuilt the DoubleClick Ad Exchange platform as a real-time marketplace to buy and sell display advertising it hopes will bring the science of search to the art of display. A three-step strategy will focus on simplifying the process, delivering better performance, and providing an open ecosystem support through the ad exchange.
In the DoubleClick Ad Exchange open marketplace, prices are set in a real-time auction to allocate display advertising more efficiently and easily across the Web. The exchange, rebuilt with Google's technology and infrastructure, contains a variety of key features to help improve return on investment (ROI) for advertisers and enable publishers to get the most value from their online content.
Google hopes to revolutionize the display advertising space similar to the way it did search advertising when it built out AdWords and introduced the notion of an open transparent and real-time auction, according to Neal Mohan, vice president of product management at Google. "If we can pull off the three performance strategies, which feedback from our partners, advertisers and publishers suggest we can, then we can grow the overall display advertising pie similar to the way we opened the search advertising market," he says.
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Advertisers, publishers and agencies agree that display ads are not living up to their full potential. Across thousands of advertisers and publishers, it takes thousands of hours to get a display campaign up and running. As a result, many advertisers give up and drop out of display advertising. Although a display ad campaign might have been the most relevant, they still drop out. Publishers often see 40%, 50% or more of their ad inventory go unsold.
Mohan says display ad serving is like an airplane taking off daily with more than half the seats empty because it was too complicated to buy the space. But on this plane, he says, the majority of the top 25 ad networks have already signed up to participate.
Advertisers and agencies will find that the redesigned DoubleClick Ad Exchange interface offers real-time bidding allowing ad networks to use their own technology to bid by impression. It also has a real-time allocation system that automatically generates the highest return for every impression by allocating ads to the highest-paying sales channel based on real-time data.
And while Ad Exchange includes all the bells and whistles of the old system, Mohan says the rebuilt platform offers more precise controls, and billing or clearing of payments managed by Google, as well as a new application programming interface (API) to allow ad networks or agencies to extend the function of the Ad Exchange into their own ad-serving and optimization platforms.
The seamless integration between AdSense and AdWords will help bring hundreds of thousands of publishers and advertisers onto the Ad Exchange platform. Through Google's infrastructure, the platform supports faster computation, offers scale in which calculations are done, and qualifies and validates inventory. The real-time bidder can support many simultaneous connections to networks in parallel.
A publisher striving to boost readership might set a $5 CPM across the ad inventory, but is willing to pay $7 or $10 for specific geographic regions. "The real-time bidder will tell you when the impression will be seen by someone in that target geography, and in real time you can switch the bid to make sure you reach that audience," he says.
In August, Google opened its Content Network to other ad networks, allowing them to serve up ads. It was the first step in integrating the AdSense Web sites on to the Ad Exchange and making it available to them. The goal was to increase AdSense publisher revenue by expanding the pool of quality display advertisers.
Google is just responding to Microsoft using its acquired reverse ad auction software company (AdECN) that is going to drive Bing.
While RTB will make ad exchanges even more efficient, it may not be that necessary.
RTB depends on 3 things: 1) inventory, which depends on how many people hit the page to generate an impression, 2) clicks, which depend on people clicking something, and 3) bidders, the more niche you get, the fewer bidders there will be. Inventory does not change rapidly. Clicks take time to accumulate (to yield click rates, which are a necessary ingredient in the RTB calculation). And if there are too few bidders the price of the auction "item" won't appreciate or depreciate much or rapidly. Because of these 3 things, making bidding real-time versus non-real-time (i.e. overnight) may not make it significantly better or move the needle much on efficiency and ROI.
And RTB will still not save "display" ads. The golden age of display was in the mid 90s when people tolerated ads when they read content. They are now trained to avoid looking at the top and right of web pages So while RTB may increase the ROI of display ads by increasing click rates from a percentage with too many zeros to count to something sligtly higher, display ads are still ignored by users and will still not generate measurable business impact for advertisers.
And yet, even when browsers are "trained" to not look at the top and right sections of web-pages, that display ads continue to work. I've seen a number of campaigns with CTR's in the 1-2% range. At that level, probably a full 10% of browsers at least saw the ad, right? Compare that to TV, where some demographics (namely, my own, 18-34yo males) almost exclusively watch TV with a DVR, and suddenly display doesn't seem all that bad, particularly for a DR advertiser, and even to an extent a brand advertiser.