Google encroaches on Yahoo's turf

Google wants a bigger piece of the display advertising market currently dominated by Yahoo, opening a new online marketplace called DoubleClick Ad Exchange.

"The Ad Exchange is a real-time marketplace that helps large online publishers on one side; and ad networks and agency networks on the other, buy and sell display advertising space," said Neal Mohan, vice president of product management, in a post on the company's blog.

Google handles the lion's share of search advertising, which matches text advertisements with search results when users look for information online. This type of advertisement accounted for 51.4 percent of all Internet advertising spending in the US during the second quarter of 2009, according to IDC. By comparison, display ads, which include banner ads and video ads, represented 29.5 percent of advertising during the same period.

Google's strength in the search ad market gives the company a strong advantage over rivals. IDC estimated that Google had a 37.2 percent share of the gross Internet advertising market in the US during the second quarter. Yahoo, Google's closest competitor, had a 13.4 percent share, it said.

While Google dominates the market for search ads, Yahoo is the leader when it comes to display ads with a 15.8 percent share of revenue during the second quarter, IDC said. Google trailed far behind, in fifth place with a 4.8 percent share of the display ad market.

With DoubleClick Ad Exchange, Google hopes that open prices set through auctions will attract publishers and advertisers, and create a more efficient market for display ads. "This improves returns for advertisers and enables publishers to get the most value out of their online content," Mohan said.

Google wants to make it easy for search advertising customers to use the DoubleClick Ad Exchange. The new marketplace will be accessible to AdSense and AdWords users through their existing interfaces, allowing them to buy and sell display ads alongside search advertisements.