Google downplayed its removal of YouTube from the DoubleClick Ad Exchange (AdX) as small potatoes, but players in the programmatic advertising community see dire implications arising from the move.
Google VP of Display and Advertising Neal Mohan announced the decision in a blog yesterday. “We’ll be focusing our future development efforts on the formats and channels used by most of our partners,” he wrote,referring in large part to TrueView, the skippable video ad format that represents some 85% of Google’s inventory.
That’s unfortunate not only for the programmatic ecosystem, but for Google’s business, too, according to Jeff Green, CEO of The Trade Desk. “Historically, Google has had a very market-centric strategy to create an open market and as much demand as possible for its inventory,” he said. “ With this move, the biggest video publisher has essentially limited the amount of quality demand. I don’t think this optimizes YouTube’s reach. It makes it more of a walled garden.”
Green’s take is echoed by Raju Malhotra, head of product at Conversant. “Google effectively had an open exchange in which the YouTube inventory had been available on AdX,” he said. “Now it’s saying that you have to go through Google’s sales force or use the demand side manager. It’s taking the biddable ads inventory out of the open exchange.”
Mohan’s minimization of YouTube’s profile is a matter of perspective, Malhotra said. “Maybe it’s only 5% of their inventory, but this is Google. About 60%of all video ad impressions are on YouTube. It’s a big player in a growing market.”
It’s pure play video exchanges that will suffer most from Google’s decision at the outset, according to Molhatra and Green, both of whom said YouTube played a small role in their businesses. Both also agree that what Google is attempting is unhealthy for the marketplace.
“I do think that there will be more attempts by other big players with ad tech ambitions to create walled gardens, but there is no stopping the power of marketplaces,” Green remarked. “No company, no matter how big, can compete with the open market.”