Below, Neal gave us a background on the evolution of the exchange at Google and its expected impact for all members of the advertising ecosystem. For a one-sheeter from DoubleClick on their new, updated ad exchange,
By the way, no more "AdX", it's just The DoubleClick Ad Exchange.
Neal Mohan: "This (the ad exchange) has been a major area of investment in terms of the DoubleClick Google integration ever since our deal closed last year.
It’s one of the key areas where we think we can add significant value, and the objective for Google is to grow the overall display advertising pie for everyone involved. That’s the big objective behind this.
So, let me take a step back and give it context so you can see where Google is coming from.
Today, display advertising is still not really living up to its full potential despite the fact that the industry has been around for well over a decade. My advertiser clients, agencies and publishers tell me this every day – of course it’s not a surprise when you have 1,000s of advertisers, 1,000s of publishers across 1,000s of ad formats – it literally takes advertisers 1,000s of hours to get a display campaign up and running. Because of that, advertisers simply drop out because of this complexity and inefficiency that exists even though display advertising may be the best way for those particular advertisers to get their message out.
On the publisher side, this translates into 40 or 50% or north of that for publisher inventory simply going unsold. The way I think about it is if an airplane was taking off every day with more than half of its seats unfilled because it was simply too hard to buy them – that’s sort of the way display advertising is today.
Google thinks that system can get better. The way we approach many of our problems today is through technology and this is how we hope to grow the [display advertising] pie for everyone.
So, there are three fundamental principles that we’ve tried to adhere to as we’ve been executing on our display advertising roadmap…
The first is simplicity. First and foremost, we want to eliminate as much of that complexity and inefficiency that I just described that exists and that’s what our DoubleClick platform has been focused on for 1000s of advertisers and 1,000s of publishers.
Of course, we don’t want to stop there. People spend money in display advertising to get results, after all. So we want to drive up performance for our advertiser and agency clients as much as possible - whether they're brand advertisers or direct response advertisers - and allow them to be able to measure it.
All the features and capabilities we’ve built on the Google Content Network and on YouTube – accessible to all of our AdWords buyers over the course of the last several years – are really geared towards driving that performance for them.
And then the third pillar, if you will, of our strategy, where the ad exchange fits squarely in, is to really open up the ecosystem. In a nutshell, we want to democratize the world of display advertising and make it as accessible and as open as possible to large and small publishers, large and small advertisers – just as search advertising is today and that’s kind of our objective.
Having said that, what is interesting about the new DoubleClick Ad Exchange is that the participants are the large publishers on one end, our advertising network partners on the other end, we’re bringing over all of our partners from the existing exchange platform on to this new platform in addition to adding several more. For example, we have the majority of the top 25 ad networks in the U.S. already signed up and ready to go even though we’re only launching it formally [today]. In addition, the biggest element and key capability of this is the seemless integration of AdSense on the publisher side and AdWords on the advertiser side. That means that the hundreds of thousands of AdSense websites will now automatically be able to participate on this exchange platform and they’ll be able to do it through the existing AdSense interface that they have. So they’ll get the benefit of the increased demand that comes from all of those exchange buyers in addition to the AdWords buyers that are already competing for their inventory.
Similarly, AdWords advertisers will be seamlessly integrated into this and be automatically eligible to not only buy the AdSense inventory that they’re buying today, but also now all this premium ad exchange inventory that’s coming online they’ll be able to buy, again, in a seamless fashion through the same AdWords interface that they know and love and have the benefit of a much broader inventory pool to buy across.
Couple of other things.. In addition to this new pool of advertisers and publishers. [Regarding] the benefits of dynamic allocation for publishers, so real-time allocation between directly sold and indirectly sold channels so that the ad slot that is filled by the ad that will generate the most amount of revenue for that publisher and the ability to have that decision be made in real-time on an impression by impression basis. If you can point an ad slot towards the $10 CPM ad instead of the $5 CPM ad in real-time and you do that millions of times a day across lots and lots of impressions, it adds up to real money for publishers.
Similarly one of the new capabilities is the real-time bidder on the advertiser side – it’s the way advertising networks can leverage their data, optimization capabilities and ad serving technologies to bid in real-time based on the information that is given to them in real-time right before that impression is delivered so that they can buy only the sites, audiences and ad space that they’re looking for.
Some of the other new capabilities are enhanced controls for publishers and advertisers, easier reporting, measureability and a new API by which ad networks can programmatically access the exchange. Last not by least, something that is a significant component of this platform is in regards to one of the other areas of inefficiency in display buying - the end of the campaign process: the billing and invoicing step. What we’re doing with this platform is to take care of that for all of our publisher and advertiser participants so that we can handle billing and invoicing across multiple geographies, multiple currencies, etc. and really take care of the clearing on behalf of our customers.
This is the general overview of not just the exchange, but perhaps more importantly, where it fits into our overall display strategy and vision. And, as I said at the beginning, the real objective is to grow the advertising pie for everyone."
Part II including a Q&A with Neil and Scott will be published Monday.