Google's Decision to Get Into "Real Time" Ads Was Really Smart, Says Google

Google makes almost all of its money selling search ads. But it is pushing hard into display ads, along with technology that lets marketers buy display ads in “real time.” Great idea, Google says.

That’s the upshot of a new blog post from the search giant, summarizing the state of the display ad market, and specifically a growing interest into “real-time bidding” for display ads.

Google has been focused on real time–which lets buyers and sellers match up specific pieces of ad inventory, at great volume and speed–for a couple of years now. That’s why it relaunched DoubleClick as the AdX exchange, which specializes in RTB, in 2009. And that’s why it bought Invite Media, which helps buyers use RTB, last June.

All of that prep won’t help Google unless ad buyers actually embrace the technology, but Google says that’s coming. Here’s a sample from Google’s post, which cites a survey of ad buyers that Google and Digiday conducted in the last few weeks (RTB = “real time bidding”):

• 88% of buyers plan to buy via RTB in 2011, up from 75% last year.
• 47% of media buyers say that the benefits or RTB will increase their overall digital advertising budget this year (16% said it would not, 37% were unsure).
• Spending on RTB is quickly moving out of the “test budget” range: 79% of buyers estimate that more than 10% of their digital display budgets will go to RTB in 2011. 33% estimate that 50% or more of their digital display budget will go to RTB. And 7% estimate 90-100% of their digital display budget will go to RTB.

Worth noting that while Google is slapping itself on the back for its foresight to get into real time, these numbers should also hearten the entire crop of ad tech start-ups focused on real time (and their investors, who have been plowing serious money into the field).

And another aside: While Google and other real time proponents play up the efficiencies the technology creates, lots of publishers I talk to are wary about real time, because they assume that “efficient” equals “less money spent.”

Google’s retort: No way! Or, more specifically: Yes, some inventory may get cheaper–but some may get more expensive, as buyers find exactly what they want and pay up for it. And overall, the spend is going up for real time right now: It says its publishers that use real time are seeing revenues jump 188 percent compared to the money they make using traditional ad networks.

To me, that sounds a lot like the pitch that ad networks themselves have made (“We’ll turn your unsold inventory into cash”). And now lots of publishers are uneasy about the effect that ad networks have had on their pricing power. But if Google’s right, they’re going to adopt real-time pricing sooner than later.