Google AdSense Adds Ad Networks

By August 28th, 2009

The big news out of the Google camp yesterday is they have opened the doors for ad networks to bid on AdSense inventory.  By logging into your AdSense account and going to AdSense Setup -> Ad Review Center you can see a list of ad networks that are bidding on your inventory.  From there, you control which networks have access.   In the YieldBuild account, I can see seven ad networks.

picture-59

I read through all the emails I received on this announcement and will give my take.

Why would Google do this? At the end of the day this is about data and making the decision about the ad that gets served which gives them the ability to insert themselves on impressions they think are valuable on more inventory.  They must feel that this will help the existing AdSense business and that the fees they can take from the ad networks will more than make up for lost AdSense revenues, or it will drive up bid prices for AdWords advertisers.

Will other big players play with Google? I think the large independent ad networks will try it out.  In our list of ad networks in the Google Exchange, we already see Specific Media – I’m not sure if everyone sees the same ad networks.  Others (I won’t call them out) that have resisted working with exchanges in the past because they believe it severely devalues their service will remain on the sideline unless they have no choice.  I’d expect Microsoft and Yahoo to compete with Google, either by continuing to operate independently, or by joining forces.  I’d put players like Fox and AOL on the fence.  Fox and AOL are both working on their own exchanges and RTB (real time bidding) platforms, but there are limited numbers of large publishers which makes maintaining and keeping them potentially expensive for the smaller standalone exchanges.  At the heart of success for smaller exchanges is liquidity.  Google certainly has a leg up on this and it can be potentially a killer for others trying to get traction without having a huge set of suppliers and demand.

How do the economics work? One of the questions that publishers have asked is, Should I turn Specific Media off since they have access to my inventory through Google?  At this point, it’s not clear how much each ad network is paying (can’t see it in AdSense reporting), and what percent Google is keeping from the ad networks (Google has never been transparent with publishers about the bid rate and the actual payout of AdSense).  Our advice to publishers is to keep running ad networks independently for now.  The program is just starting and hasn’t been ramped up.  Then, we’ll need to run tests by turning off ad networks and gauging overall fill rate and CPMs.

What does this mean for the future of ad networks? This is an interesting question to conjecture.  We have believed that the number of ad networks will continue to grow into the many thousands.  Super large ad networks will prefer to have direct relationships with publishers, but will go to exchanges for some inventory.  Medium and small ad networks will ultimately focus on selling ads and servicing advertisers over managing publishers.  Most of the inventory they sell will come through exchanges as long as they can get the targeting options they need for their niche.  However, especially small network growth may be slowed if the minimum fees on the exchanges are too expensive.  If that’s the case, I suspect a sub-market will emerge of platform providers that aggregate small networks to get them onto the exchanges with less fees.

How does this impact publishers? Depending on the segment of publisher you are in this means different things.  At the lowest level, if you are a niche AdSense only site, this will probably help your revenue over time.  If you are a medium- or large-sized publisher without a direct sales force, it has the potential to help, but it becomes increasingly worrisome for one entity to have full control over the value of your inventory if they do become the one-stop shop.  For medium-sized and large publishers that sell their own inventory, they will want to make sure that the exchange network is blind so they don’t run into channel conflict. I also suspect that when Google is at full scale with certified ad networks that publishers will hold back inventory in the hopes at preventing the field from becoming completely tilted in Google’s favor.  Similarly to SEMs, publishers want competition.

What does it mean for Ad Network Optimizers like YieldBuild?  For YieldBuild, we view it as a good thing that Google is creating more demand for AdSense inventory.  I have personally felt that this would be the trend for a few years and that we will ultimately end up with two or three major exchanges for remnant inventory, but it’s likely to take a few more years still before this is a reality.  My hope for the industry is that it remains competitive for distribution and there will be continued demand for optimization services, and consolidated reporting with analytics that publishers value.  This may lead to a reduction of ad networks that publishers need to manage, but there will be more than one player

Bookmark and Share

This entry was posted on Friday, August 28th, 2009 at 11:35 am and is filed under Online Advertising, YieldBuild. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Google AdSense Adds Ad Networks”

  1. Clive Says:

    Interesting.

    Erm, so if I see about 50 networks in my adsense account area (where you mention you have 7) is that good for us (in theory) as more people are vying to display ads on our site? Or, bad as too many people have access to our information?

Leave a Reply