Will Google soon own the banner ad market too?

A few weeks ago Google announced that it has rolled out the DoubleClick Ad Exchange, which is a marketplace for buyers and sellers of online display advertising (i.e. banners).  An online display ad exchange is not a new idea by any means, but because this iteration has the support and brains of 800-pound gorilla Google behind it, many experts are predicting a shift in the buying and selling of banner ads.

Don’t get me wrong – I think the DoubleClick Ad Exchange has an excellent chance of grabbing a sizable chunk of the banner ad market.  But at the same time, the only way it will be anywhere nearly as successful as Google AdWords is if this new platform can address the bigger problems that currently plague online display ads.

The days of counting clicks on banners are numbered for most advertisers.  Many online marketers have known clickthroughs are not a good predictor of campaign ROI for a long time, but the movement has really gained momentum in the past year or so as clickthrough rates (CTRs) have plummeted across every industry.  So if clickthroughs shouldn’t be the ultimate metric that measures banner performance, what should be?  That’s an ongoing debate – but my bet is that brand awareness, purchase intent, and engagement will be evaluated more closely in the future.  That doesn’t bode well for the DoubleClick Ad Exchange, since it’s easy for an ad exchange to measure clicks but much harder to measure these types of metrics.

You can also look at schools of thought like the one put forth in this TechCrunch article about killing the CPM.  Perhaps DoubleClick Ad Exchange will incorporate lots of different ways to set up your campaign to address the many different types of revenue metrics currently out there.  (If there’s a company that can take a dizzyingly complex set of data and simplify it, Google is it.)

I think the success of DoubleClick Ad Exchange all comes down to whether or not Google will find the magic formula for:
1) helping advertisers reliably measure the true performance of their ads using some other metric or combination of metrics, to combat the decline of the clickthrough; and
2) balancing the needs of site owners and advertisers to find appropriate rate types that help each side.

The banner ad isn’t dead – it’s just evolving.  Now that Google is getting its hands into the market in a big way, you might not even recognize banners in a couple years.