Looking At New DoubleClick Ad Exchange Whitepaper From Google

DoubleClick Ad ExchangeFrom the Official Google blog, Google exchange strategy takes center stage as VP of Product Management Neal Mohan announces the publication of a new whitepaper which reaffirms what he says is the contribution which the DoubleClick Ad Exchange is making to the advertising ecosystem. Read the post. And, download the paper. (PDF)

Mohan notes the addition of “hundreds” of premium publishers added to the Exchange beyond the ongoing collection of AdSense publishers and a tripling of “transactions” from a year ago through the Exchange.

Mohan adds a point from the whitepaper, “When publishers make ad space available in the Ad Exchange, and the Exchange wins the auction, publishers generate, on average, 188% more revenue compared with indirect sales to ad networks and other third-party buyers.”

The comment about “indirect sales to ad networks and other third-party buyers” is important as Google looks to position the Exchange as a replacement to intermediary ad network functions – where an ad network buys media through an exchange or network, for example -presumably other than Google’s DoubleClick Ad Exchange. Clearly, this is a direct slap in the face to the yield optimization or sell-side platform crew (AdMeld, PubMatic, Rubicon Project among others) and Right Media Exchange as Google wants those companies’ publishers to bring their inventory to the Exchange. Nothing like good, old-fashioned competition!

In some ways, the 188% increase insight is not much of an insight… are we talking about $.05 CPMs going to a $.13 CPM? That’s not a place (the $.05 CPM inventory) that some of the largest publishers with the most coveted inventory – and a direct sales team – will care about. It may behoove them to eliminate that $.05 inventory all together to improve their inventory scarcity strategy and reduce the “data leakage.”

Of course, the Google plan also includes large and mid-tier publishers who have little or no direct sales team. These publishers would love a 188% increase on their $.05 CPM inventory which also commodotizes the audience of the bigger guys potentially. Still, the URL will be important for marketers so that can’t be taken away from the so-called “premium” publishers. In that vein, maybe the 188% increase speaks to “premium” publisher inventory where $.75 CPMs are now $2+. (This debate has bubbled up in the AdExchanger comments last week).

Another note on the Google comment regarding improved monetization through the Exchange for publishers: Google is not publicly saying its a replacement for ad networks. I’m not sure they will anytime soon. The ad networks and demand-side platforms are the big buyers on the DoubleClick Ad Exchange. The goal down the road is to have the marketers buying direct with tools like Invite Media, or DoubleClick For Advertisers (DFA) – or other bidding tools provided by DSPs/ad networks/yes, AppNexus, too as long as Google has insight on who the marketer is.

If Google can see all this marketer data, Google can start providing better attribution information which continues the swirl of buying through DFA/Invite Media and most importantly, through the DoubleClick Ad Exchange containing the fat, “black box” margins of Google AdSense. At some point, they could require that only Google bidding tools are used through the Ad Exchange, but that possibility seems distant considering the complexity and need for services and partners to facilitate buying -let alone the dance around anti-trust and the appearance of a monopoly.

It remains waaaaay early days for data-driven, digital audience buying and selling.

By John Ebbert

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  1. Sorry, can I ask for a clarification for a novice? What did you mean by “the fat, “black box” margins of Google AdSense?” This world is hard enough to grasp, but there it’s doubly so trying to catch up on legacy markets like AdSense. Thanks for any further insight.

    • Through the DoubleClick Ad Exchange, buyers buy impressions from the AdSense network. Publishers receive a revenue share of all impressions sold. They do not know what the buyer is actually buying at for each impression (the difference is the margin which Google receives). Likewise, buyers only know the price of a publisher ad impression as offered in the Ad Exchange, they don’t know what the publisher gets.

      This margin is not only a lotta cash in comparison to other marketplaces, but also a key way for Google to gain insight and advantage.

      • Anonymous

        AdSense revenue share percentage on display and search are shown in your AdSense account settings (under property information).

        The release from Google is astonishing, a fully exchange-based ecosystem is developing faster than anyone expects.

      • Regarding “AdSense revenue share percentage on display and search are shown in your AdSense account settings (under property information).” Exactly.

  2. Step 1 of Google world domination….. Rubipubmeld has taken away a lot of traffic from Adsense and its about time they try to get it back. Adsense in a liquid environment is a beast that will be tough to beat just by itself. Add in AdX dynamic allocation, Invite’s buying platform, Teracent, maybe a DMP thrown in for good measure and it will be the most domindant SSP/Ad Server in the world.