Google’s Trojan Horse: Let the Free Ad Serving Begin

One of the biggest misunderstandings in much of the discussion about Google’s deal to buy DoubleClick is the perception that DoubleClick actually is involved in selling advertising.

It’s not. It sells software that advertisers and publishers uses to place and keep track of Internet ads. DoubleClick is in a market that is adjacent to, but not the same as, what Google does. That’s why European and American regulators ultimately decided the deal didn’t violate antitrust rules.

Google says DoubleClick will help it expand in display advertising used by brand marketers. How will it do that? DoubleClick, it says, does have relationships with big players. But I’m not so sure how much that is worth. Who is not going to take a sales call from Google these days?

The answer can be seen in a geeky-sounding product that Google introduced Thursday morning called Google Ad Manager. The service, which is being tested with invited clients, essentially does for small and midsize Web sites the same thing that DoubleClick does for big ones. When the sites sell their own ads, Ad Manager keeps track of the advertising orders, and it actually places the ad on Web pages, a process called ad serving.

There are two aspects of Ad Manager that are most significant: First, It is completely free to site owners. That can save as much as a penny for every thousand ads displayed charged by other services. (There is some free open source ad serving software, but this must be installed and maintained. Google hosts its service on its vast network of data centers.)

And second, Ad Manager is designed to work especially well with AdSense, Google’s advertising network. Publishers enter all the ads they have sold, with the parameters, including the price paid and whether they guaranteed the marketer a certain number of impressions. Then each time a user is about to view a page, Ad Manager figures out which ad will make the publisher the most money. It compares the ads the publisher sold itself to the ads available through AdSense. If Google’s ad pays more, and it won’t cause the publisher to default on any guarantee, it will show the ad from AdSense.

Of course, Google says its system will let publishers display ads from other networks, like DrivePM from Microsoft or Advertising.com, from AOL. But the publisher has to manually decide which pages to place those ads on.

AdManager and DoubleClick are meant by Google to be operating systems for advertisers. Even if they are open, it can win business by making sure it has the first and best integrated offerings on those operating systems. Look for Google to make it especially easy for publishers and advertisers using DoubleClick products to buy and sell through ads AdSense.

And of course the best way to get people to adopt an operating system these days is to make it free.

I asked Rohit Dhawan, the product manager of Ad Manager, if we will see a free version of DoubleClick’s DART software any time soon. He said there was a difference because DoubleClick customers wanted more service and support than Google would provide with Ad Manager.

“Given that it is an enterprise class product, there is no immediate plan to change DoubleClick’s pricing,” he said. “But the industry trend has been lower and lower pricing.”

I learned two more interesting tidbits. First, Google started to build Ad Manager before it agreed to buy DoubleClick, and the product has been ready to release. It chose to wait until after the merger closed so as not to signal to customers or regulators that it was preparing alternatives in case the deal was rejected.

“We wanted to make sure we were committed to the DoubleClick product line,” Mr. Dhawan said. “We acquired it for a reason.”

Also, I asked him how Ad Manager allows publishers to target ads based on data about users. For now, publishers can use any data they collect themselves, such as through registration, and Google’s software will use it to pick the right ads. But none of the data that Google collects on its sites or on other sites will be used for the ad targeting. Google will use a different cookie—that is an identification number placed on each user’s browser — for Ad Manager than it uses for other products in order to help keep the data separate.

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