How Google built its own advertising system.
Nexstar Media Group, the largest local news company in the United States.（Nexstar Media Group Inc.）, recently experimented with what would happen if Google's advertising system stopped serving ads on its website.
A few days later, the company's video advertising sales plummeted."It's a huge impact on revenue," said Tony Carterser, Nexstar's senior vice president.（Tony Katsur）Said.After a brief test, Nexstar is back in Google's arms.
This example is enough to give a glimpse of Google's enormous energy in the digital advertising industry.Recently, Google has come under fire for its dominance in digital advertising.
The U.S. Department of Justice and state attorneys general are investigating whether Google abused its power, including its dominant position as a digital advertising sales agent for the entire network.During the September subpoena, investigators asked nearly 130 questions, mostly about the inner workings of Google's advertising products and how they interacted with each other.
We delved into Google's vast and mysterious advertising machine and showed how it works and why advertisers and competitors complain so much about it.
Google's dominance in advertising sales stems in large part from acquisitions of ad technology companies, notably DoubleClick in 2008.Regulators who approved the $3.1bn deal warned that Google would step in if it tied its products together to create a monopoly.
In interviews, dozens of publishing and advertising executives said Google was achieving a monopoly through a range of cross-cutting products.Google operates a leading tool for selling and buying ads, as well as the largest digital advertising market.
When Nexstar didn't use Google's sales tools, it missed out on the large demand generated by buying them through Google."It's just about trying to bind you tightly," Tony Catterwell said.”
The first step is to understand how the purchase and sale of digital advertising occurs and the role Google plays in it.Here's how it works - it all happens in a flash:
Google's role as both a major trading platform and a trading party for selling digital advertising has prompted calls for regulators to take action.Presidential candidate Elizabeth Warren.(Elizabeth Warren)A merger between Google and Doubleclick has been proposed.
Google says its ad-product collaboration system is one of the main factors attracting publishers, advertisers and other technology companies.In a written statement, a Google spokesman said:"Publishers use our technology to get demand from more than 700 partners, and Google is just one of them.Advertisers use our technology to buy ad spaces on more than 80 trading platforms.The interactivity of advertising technology allows publishers and advertisers to match technology partners to meet their different needs.”
More than 90 percent of major publishers use Google's advertising server DoubleClick for Publishers, according to interviews with dozens of publishing and advertising executives.
Publishers say using Google's DoubleClick for Publishers is the only way to gain full access to Google's AdX trading platform.Why does AdX excel on many trading platforms?One reason is that it is linked to AdWords, another powerful Google product, which exploits Google's dominance in search.
It sounds complicated, but here's a simple diagram of how the different components are connected:
For years, Google's AdX was the only advertising trading platform that could earn that portion of its advertising revenue.Google is now opening up some of the demand from AdWords to rivals, but AdX still has most of the advertising needs, according to people familiar with google's advertising offerings.
Publishers rely so much on the personalized advertising needs of Google's AdWords that an executive at a major publisher calls it a "stitch".
News Corp., the parent company of the Wall Street Journal.（News Corp）It has long been a critic of Google and is taking legal action against it with Australian antitrust authorities.News Corp. had considered moving its advertising business from Google to rival AppNexus, but that would ultimately jeopardize 40 to 60 percent of advertising demand from Google's advertising system, according to people familiar with the matter.News Corp. has invested in several advertising technology companies that compete with Google.
In Australia, The Sydney Morning Herald（Sydney Morning Herald）Publisher Fairfax Media Limited.（Fairfax Media Limited）Google's advertising server was deprecated in 2016 and replaced with AppNexus, but returned to Google the next year.
Axel Springer SE, the German publisher, is the most famous example of leaving Google for App Nexus, but Its largest US subsidiary, Business Insider, remains on Google.
Publishers are also under additional pressure:Google's own industry, as well as companies such as Facebook and Amazon, are competing with them for digital advertising revenue and winning.The tech giant will receive 68 percent of the $130 billion in digital advertising spending in the U.S. this year, according to eMarketer.
Overall, Google's advertising revenue last year was $116 billion, up 22 percent from a year earlier and accounting for 85 percent of the company's total revenue.Much of the advertising revenue comes from Google's own industry, but the company's role in online ad agency sales outside its platform also gives it a bigger advantage.
Google sometimes provides incentives for people to use its products at the same time.According to a contract seen by the Wall Street Journal, a few years ago, Google waived some of the fees publishers paid to DoubleClick if it sold ads through the AdX trading platform.
Last year, Google merged the two products, DoubleClick for Publishers and Adx, into a Google ad manager, according to an advertising and publishing executive.（Ad Manager）products, which made the industry understand that they are indeed inter-linked.
The website sells their advertising space on the trading platform for auction.But there are several major trading platforms - how do publishers decide which platform to sell their advertising space on?
Google's rivals and critics have accused the company of harming publishers and helping the AdX trading platform in the process for years.Here's how it does it:
Google has now made more changes, which it says will eliminate any advantages it once had.But at the same time, this will be accompanied by other changes that publishers fear will weaken their control over how ads are sold.
Google's years of tightening have hurt not only publishers but also rival advertising technology companies.
Several of DoubleClickfor Publishers' competitors have left the advertising service industry in recent years, including OpenX, Facebook and Verizon Communications.
"The advertising technology industry is like a graveyard, " says Tilberg University in the Netherlands.（Tilberg University）Damian Gratin, antitrust lawyer and professor of competition law and competition economics.（Damien Geradin）Said.He works for News Corp.(News Corp)publishers to provide advice on european competition issues.
In early 2016, Google began asking advertisers to use Google's tools to buy video ads on YouTube, by far the most visited video site.Previously, advertisers could use a variety of third-party buying tools to buy ad spaces on YouTube.
"In many ways, it's the beginning of the end of the competition," said Brian O'Kelley, co-founder of AppNexus.Last year, AppNexus was sold to AT&T for about $1.6 billion after revenue growth stalled.He has previously admitted that AppNexus, like other companies in the industry, is working to root out fraud in the industry.
Ali Paparo, who now runs Beeswax.io corp., a professional advertising trading firm that competes with Google.（Ari Paparo）Said:"Google is using its monopoly on YouTube to scale up.”
Also in 2016, Google began allowing data collected from services such as Gmail and Google Maps - such as users' geographic locations and email addresses, to be used in DoubleClick's personalized advertising system - but only for customers of DV360, its advertising buying tool.
Google said it anonymized the data and aggregated it into segmented audiences, and then stopped using Gmail data for ad personalization in 2017.
An advertising buying company that competes with Google said that when they asked for access to the data, Google refused, citing privacy concerns.Rajif Goel, chief executive of rival advertising technology company PubMatic.（Rajeev Goel）Said:"We offered to sign a privacy agreement, but Google refused.”
A former Federal Trade Commission official who supported Google's acquisition of DoubleClick in 2008.（Federal Trade Commission）Senior officials now regret this."At the time, it seemed like the right decision, but things have changed a lot over the last decade or so.The official said.
(This article was compiled by Zhiyi.com, the original text please click "Read the original")
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