Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Google, Yahoo in display ad showdown

Google's new DoubleClick ad exchange allows display advertisers to more easily target Internet users, which could challenge Yahoo's dominance.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By David Goldman, CNNMoney.com staff writer

How are you doing financially compared to the start of the year?
  • Better
  • Worse
  • About the same

NEW YORK (CNNMoney.com) -- In a challenge to Yahoo's display ad dominance, Google unveiled a new technology aimed at making advertising easier for marketers.

Called the DoubleClick Ad Exchange, Google's new system simplifies and improves how advertisers put display ads onto Web sites. Like Google's previous ad exchange, the new one allows advertisers and Web site publishers to buy and sell ad space. But the company says the new system gives advertisers much more control over who sees their ads, and where and when they are displayed.

Google (GOOG, Fortune 500) has been the search advertising leader for years, but it makes the vast majority of its revenue on what are called relevant text ads or those ads that appear next to search results on Google and its partner Web sites. Rival Yahoo (YHOO, Fortune 500), on the other hand, has led the display advertising universe, which controls the banners and colorful ads consumers see on the Internet.

Google's goal is "to simplify the system for buying and selling display ads, to deliver better performance that advertisers can measure, and to open up the ecosystem for all," said Neal Mohan, Google's vice president for product development.

The new and improved ad exchange comes at a good time for the company. Text ads, Google's bread and butter, are flatlining as the market has become saturated with the punchy and cheap ads. Google has tried to expand its display ad operation, acquiring DoubleClick in the first quarter of last year, but it has been unable to make much headway.

Overall, Google is the clear search leader, maintaining a 64.7% share of the search market, according to data tracker comScore. Yahoo holds just 19.3% of the overall market.

What is an ad exchange? A typical ad exchange allows advertisers to automatically bid on ad space as soon as an Internet user clicks on a site. The Web publisher accepts the highest bid, and the ad is instantly displayed for the user. Since the process is all automated, the bidding happens in a fraction of a second.

Google's new exchange improves upon an element that allows advertisers to target audiences by weighing a series of factors. Web site publishers typically send information about who is viewing their site based on a user's traffic history. The new exchange asks advertisers questions about who they are targeting, giving the advertiser the ability to automatically bid on the ad space depending on whether a user fits a particular set of criteria.

Another new feature will open the DoubleClick exchange to the hundreds of thousands of users of AdWords and AdSense. Those users -- Web site publishers and advertisers -- will be able to bid to sell their ads and space on the new display exchange.

Unlikely to unseat Yahoo. Analysts say Google's improvements could help it give Yahoo a run for its money, but a coup is unlikely anytime soon.

"Google has a lot to bring to the table in terms of simplifying the process and adding more transparency around search results," said Matthew Egol, partner in the consumer media and digital team at management consultancy Booz & Co. "Google makes it easier to buy and sell ads than Yahoo, but Yahoo also offers a large scale volume of traffic that can also be branded."

Egol said Google will attract more advertisers who want to drive more click traffic.

But the new technology doesn't solve the reason Google has been slow to take off in display. The company has been mostly focused on the number of clicks ads get, but not on a brand's particular strategy. While Yahoo also offers an ad exchange, it is far better at helping premium advertisers develop a marketing strategy, he argued.

In July, Yahoo agreed to sell its search technology to Microsoft (MSFT, Fortune 500) in exchange for a revenue exchange and Yahoo's exclusive right to solicit premium advertisers for both companies. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
The 10 best states for retirees It might be worth moving to a new place to find your dream retirement home. Check out these 10 states. More
A look at Sears through the years Now Sears has officially said its business has an uncertain future, here's a look at photographs that documents the store's rich history. More
Coolest hotel bars for business travelers in 2017 CNNMoney asked a high-end concierge service for routine business travelers what hotel bars they'd recommend in 4 major U.S. cities. Here are the best spots. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play