Google's new display ad program could hurt big sites

Google (GOOG) is about to launch a powerful upgrade of its DoubleClick display advertising platform. It will be called DoubleClick Ad Exchange and it could take business from many of the Internet's largest properties.

Google paid $3.1 billion for DoubleClick, and if the upgrade works it could get some return on its investment.

The New York Times writes that "some ad executives said that the exchange, if successful, could mean headaches for high-end publishers, as it would allow advertisers to reach their intended audiences more cheaply on other sites." If that is true, very large sites like CNN.com and NYTimes.com could find that some of the advertisers that pay them the highest CPMs move some of their business to smaller sites that can deliver the same number of online readers at lower prices.

Companies that rely on Internet advertising are already struggling with lower CPMs because of the recession and large ad networks. The networks often buy unsold display space at Web sites, purchasing the inventory at extremely low prices. The Google plan could lower prices on higher-end ads by making them available through an open bidding process.

If Ad Exchange works, life is about to get harder for the online industry's biggest websites.

Douglas A. McIntyre is an editor at 24/7 Wall St.


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