SAN FRANCISCO (MarketWatch) - If eBay wanted to do something radical, it would become the exchange for advertisements.
EBay
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is already an exchange where buyers and sellers meet to trade stuff -- from Pez dispensers, cars to homes. Imagine if it became a marketplace platform where ad buyers and ad sellers transacted business. Think of the cut that eBay would get!
Alas, Google is already well on its way to becoming such an exchange.
Google already has AdWords, which helps marketers place their advertisements on Google's search-results page and a growing list of content publications, like blogs. On the flipside, Google's AdSense helps online publishers make available their real estate so Google can plaster ads on them.
But imagine a more automated world in which online publishers place their inventory on Google's exchange. Online advertisers could choose, in an a la carte format, where they wanted to place their ads -- whether they wanted to buy keywords across a number of sites, or if they wanted to simply choose a specific site.
Google would sit in the middle and take a cut of all the transactions.
This is one reason Google
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remains so intriguing. It would be interesting to hear Eric Schmidt, Google's CEO, comment on such a new world for ad buyers and sellers. (He'll be giving the luncheon keynote speech at Goldman Sachs Internet conference in Las Vegas on Wednesday.)
Google's AdWords and AdSense programs are already the foundations, noted Scott Milener, CEO of Browster, a startup that's essentially creating new online real estate for advertisers. "Google is in a good position to broker ads not only on their properties, but on other properties as well," he said.
"I think it's entirely possible and probable," said Scot Wingo, ChanelAdvisor, which helps companies sell their goods or advertise on sites like eBay, Yahoo
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and Amazon.com
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. "Google will have a central ability to help price, deliver, monetize and bill in one location. They've got a lot of pieces built already... This is also one way they can get more real estate."
Google is already building upon its foundation as the ad middleman by giving advertisers more flexibility and control with its Site Targeting service. This service, currently being tested by online publications, is expected to be officially rolled out in a couple weeks, according to Google's Susan Wojcicki, director of product management.
Essentially, site targeting lets advertisers choose among publications that have signed up with Google. Google won't disclose which publications are participating in the test, but some of its content partners include New York Times Digital, and About.com.
Advertisers would have the choice to buy based on the number of impressions made, known as CPM (cost per thousand impressions), or based on the new online model of cost per click, CPC.
Advertisers would thus have the choice to either buy a keyword, or a particular site they wished to be associated with. For instance, GM might choose to buy a series of keywords such as "cars," "vroom," and "fast" and pay for each click, or it might choose to be on, say, the Los Angeles Times web site and pay for each 1,000 impressions.
This gives advertisers more options for choosing which publications they want to be associated with and this gives online publishers a way to capitalize on their brands, said Wojcicki.
The result would be that both CPC buyers and CPM buyers will wind up bidding against each other, theoretically driving the prices higher for ads.
Online publishers would be crazy not to participate in this system if they wanted to get the highest revenue for their real estate, I'd imagine.
And, if online publishers do open up their inventory to Google, then they solve one key problem that's been holding back this idea of an advertising exchange.
The idea of an exchange "has been kicking around since '95, but no one has ever been able to grab hold because publishers wanted to have control," said Rich LeFurgy, partner at WaldenVC and founding chairman of Interactive Advertising Bureau. "The realization today is that publishers can still maintain their high-value inventory and outsource everything else, saving on headcount... There is an opportunity for this."
Google's Wojcicki wouldn't prognosticate on the future of such a format, but she did say that one of the characteristics of Site Targeting is that it gives advertisers more selection.
AdBrite prototype