Chasing the Display Ad Goldmine

This week Google declared a war for display ads, the next online goldmine.

Neal Mohan, VP for product management said the company has 1,000 engineers around the world working to make the display ad market simple and easy, to draw more ad dollars.

Mohan projects that the display ad market will quadruple to $100 billion over the next few years from its $20 billion to $25 billion market now. Google only has about ten percent of the current market — it said last fall that its display ad business hit a $2.5 billion annualized run rate. And now Google faces a slew of new rivals for those booming display ad dollars.

The biggest names in newspaper publishing — New York Times Co. , Hearst, Tribune, and Gannett, are teaming up to snag their own share of the display ad market. The companies, through a consortium called Quadrant One, launched their own private online ad exchange, called Q-Exchange, to consolidate their local newspaper ads from two hundred publications including the Boston Globe, Chicago Tribune, and San Francisco Chronicle. It's the first online ad sales exchange dedicated to *premium* local content. That means advertisers aren't buying so-called 'blind' inventory to reach a certain demographic — they know exactly where their ads will be shown.

So far it's off to a strong start — more than 2,600 advertisers bid on Q-Exchange in the first 2 days after its launch and more than 600 advertisers have already served impressions via Q-Exchange.

The publishers behind Q-Exchange are hoping to grow the market by drawing a broader range of advertisers and higher ad rates. They're appealing to marketers not just by consolidating a huge amount of premium ad inventory, but also by providing new data about audience engagement and recommendations how to tweak campaigns to maximize impact.

Q-Exchange is just the latest in a wave of content creators reclaiming control from outside exchanges. CBS Interactive, Forbes and Weather.com have also created their own exchanges — looking to appeal to marketers with their premium brands.

When publishers like the New York Times Company or CBS sell their ad inventory themselves, they're keeping it from being sold through ad exchange giants, like Google's Doubleclick Yahoo's Right Media and Microsoft's Ad ECN. The tech giants and publishing companies are certainly not direct rivals — and Q-Exchange relies on Google for much of its ad serving and infrastructure — but they're both chasing what they see as a huge opportunity.

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