Google, AppNexus And The Mayan Calendar

Google and AppNexusAll Things D's Peter Kafka reports that AppNexus direct access to Google DoubleClick Ad Exchange display ad inventory has been cut-off temporarily for what appears to be one of two reasons - which actually may be intertwined.

Kafka quotes a Google spokesperson who suggests there may have been something going on with an unidentified campaign(s) coming from AppNexus saying obliquely, "We have technologies to detect violations, and when a customer is in breach of our policies, we take action, including potential suspension from the Ad Exchange." Meanwhile, AppNexus president Michael Rubenstein tells Kafka, "We’re modifying our process of working with Google to create a new arrangement whereby AppNexus clients wishing to access Google inventory will have their own individual seats on DoubleClick Ad Exchange, but will continue to serve impressions through AppNexus." Read more.

So, what happened... really? Answers vary.

  • Coulda been a malvertising-infused ad campaign and Google decided it can't risk campaigns coming through AppNexus anymore. Seems lame. Can't believe they'd just boot 'em for that with little warning.
  • As some have suggested and Kafka notes, coulda been a strategic move to thwart a competitor like Microsoft as it gets into the display game through their AppNexus investment. Doing this during the busy holiday buying season when impression volumes are at their highest would potentially cause the greatest damage. I don't know about this one.. still seems so "early days". And, if AppNexus were to run into trouble because of this, another Microsoft infusion would be a piece of cake. Microsoft makes BILLIONS in PROFIT each quarter as you may recall.
  • Others see the Google monolith just moving slowly, perhaps ploddingly so, and this was inevitable as Google looks to have all demand partners buying direct instead of through intermediaries. This would echo Google's current positioning with yield optimizers/aggregators who can't offer supply through the DoubleClick Ad Exchange as they are seen as intermediaries. I choose this answer.

But, let's fantasize a bit. [Ripple dissolve] No, I mean it. [SUPER Ripple dissolve] What could be the next, big strategic step here for Google?

How about requiring all DoubleClick Ad Exchange buying and selling only through DFA/DFP, the spawn of Invite Media or a Google-built agency trading desk?

This could inhibit liquidity in the short term, but Google could circumvent this by giving away all the serving and bidding tools for free. That's gonna be hard to resist AND drive liquidity in the long term.

Yahoo!, AppNexus and others could retaliate and say "no" to Invite Media/DFA buying, but suddenly they've lost a big demand partner which in turns drives publishers to Google looking for better yield. (This will be a great movie thriller. I can see Matt Damon playing AppNexus CEO Brian O'Kelley, can't you?)  Anyway, that ain't gonna work for Yahoo!/AppNexus etc. Other big players may be in the game at this point, too, like Cisco, Dell and Oracle which end up buying smart, smaller ad tech solutions. It won't matter. The infrastructure guys don't have the digital ad sophistication, experience and - most importantly - publisher inventory to win. And then there's time - this game will be played very quickly.

Back to the story!... so the Google competitors cut margins on their own tools or make them free in order to compete, but the blackbox margins of AdSense aren't available to them and steadily they start hurting, and then start screaming about anti-trust concerns. That may be their only hope.

Who's your Daddy? Why Google, of course.

The Bigger Picture

Can you imagine getting your Internet/TV/Phone for free through a high-speed, wireless connection provided by Google? Coming soon!

And the sites you can access are only sites that have agreed to rules of the Google Internet. Net neutrality doesn't apply - this is a new Internet, separate Google pipes. Go ahead and use the old one, but Google isn't going to be there.

And of course every site on the planet - except those owned by News Corp and a few others - will line up.  Google will let your site into the Google Internet which allows for the free flow of data (using Google rules - the key) with protections for the consumer. It doesn't want to run afoul of the government, after all.

So, it's not that Google will steal the Internet, it will just create a new one - its own owned-and-operated version of it. It's not diabolical, it's business.  Google thinks it can do the Internet better. That IS the end game. I'm not sure they even know it. Facebook might be there with its own version of the Internet, too. And, of course, these new Internets will all run nicely on Apple computers that will burn out every 2.5 years.

At some point in the future, the U.S. government will try to break Google up like it did with the telcos since it will be too much power in one place and will threaten governments not just in the U.S.   Unfortunately, Google will arm itself with nuclear weapons made from javascript. Life will cease to exist as we know it. We will all be microbes again.

There. I said it. And, the Mayans were only off by 4 or 5 years.

I love audience-based buying!

By John Ebbert

2 Comments

  1. Classic John. Nicely done.

    What AllthingsD missed was that Google and its peers are forcing the majority of intermediaries (MM, IM, APN, TGT, etc) into having direct relationships for all of their clients w/individual exchange seats.

    One of the main reasons: keeps the sales staff happy b/c of the transparency into who is buying.

    Reply
  2. I see Google's move as consistent with Yahoo's prior move in not making inventory available to a perceived exchange competitor. AppNexus is an exchange being used by ad nets the way the ad nets used RMX (before Yahoo cleaned it up). Why would Google or Yahoo feed a competitive exchange?

    Reply

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