Google confirmed reports from yesterday that it acquired Invite Media, a bidding exchange for display advertising. Google did not disclose the amount of the deal, but Peter Kafka at MediaMemo pegs it at around $70 million (update: one investor calls that amount “inaccurate,” but can’t disclose the true amount. The company raised a total of about $5 million in two rounds). Today on the DoubleClick blog, Google explains what the startup does:
Invite Media has developed technology that enables advertisers and agencies to use “real time bidding” to buy display ad space, and to optimize display ad campaigns, across multiple advertising exchanges, all in a single interface.
Google is a big proponent of realtime bidding. Its search keyword advertising is priced based on an auction model. Invite Media brings auction pricing to display ads by giving advertisers a mechanism to ” tailor their bids on an impression-by-impression basis, based on their own data.”
Last year, DoubleClick launched its own Ad Exchange, which will work now work hand-in-hand with Invite Media’s technology. There is no doubt that Google wants to take the best parts of paid search ads and bring those economics to the world of display advertising. The question remains, however, whether auctions benefit the advertisers or publishers more. It all depends on how much bidding there is for a specific ad slot. My guess, though, is that there is so much inventory that market pricing will have the effect of pushing average CPMs down because there is no scarcity when it comes to online advertising.