Updated September 18 at 10:40 a.m. PDT with Yahoo comment.
Having conquered the Web's text-based ad market, Google is setting its sights on graphical display ads--a market dominated by rival Yahoo.
The search giant on Thursday took the wraps off a revamped DoubleClick Ad Exchange, a public exchange that allows publishers to offer excess ad inventory they can't sell to advertisers looking for a bargain. Google said the exchange will meld DoubleClick's ad exchange with Google's own technology.
"Better technology can help make display advertising work better for all involved," Neal Mohan, Google's vice president of product management, said in a statement. "We're focused on growing the display advertising pie for everyone. The DoubleClick Ad Exchange is a major part of that goal."
The revamped exchange will incorporate Google's AdWords and AdSense programs, as well as feature real-time bidding and a new API (application programming interface) designed for ad networks.
Yahoo, which runs the largest online ad exchange through RightMedia, an exchange it purchased in 2007 for $680 million, said it expected the display market to have other exchanges.
"We welcome these exchanges, and look forward to working with them and integrating with them for our partners," Yahoo Marketplace chief Frank Weishaupt said in a statement. "The industry will be well served if all exchanges embrace the values we cherish, and will help promote rather than restrict the spirit of openness and the resulting transparency and liquidity of supply, demand and data in the industry."
Google's dominance of the search engine advertising market has been fueled by text ads. In 2008, it completed its $3.1 billion acquisition of DoubleClick in hopes of expanding its presence in display ads. Display ads--banners or image-based advertisements--haven't produced the same return that search text ads have to this point but are still an important part of most Web sites.
Internet display advertising accounted for $7.6 billion in 2008, roughly a third of the $23.4 billion in revenue generated by all Internet ads for the year, according to the Interactive Advertising Bureau.