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Yahoo may be getting out of the search business, but now Google is gunning for the company's stronghold: display advertising.

The search giant announced the DoubleClick Ad Exchange Friday, which will function like a stock exchange for display advertising online. Google is hoping that this auction market will help automate the process of buying display ads and  break the code for display the way that Google tapped into the search market.

Google may have 70% of the search market, but in display it has a paltry 1.3% of ad views. Will the DoubleClick Ad Exchange change all that?

According to The New York Times:

"Some industry executives say that the DoubleClick exchange will give advertisers more flexibility than Yahoo’s, allowing marketers to aim their ads more precisely at certain types of customers and to buy one ad spot or 'impression' at a time."

Google has been interested in the display ad business for awhile now. Display is harder to track and monetize than search, but Google search revenues are falling and the company is serious about getting into display. In the company's announcement Friday, Google wrote that display ads are “vital in boosting awareness and sales” on the web.

After failling to find footing on its own in display, the search giant bought DoubleClick two years ago for $3.1 billion and has been integrating DoubleClick’s technology with its own ever since.

That said, this is not likely to be a huge business for Google. Silicon Alley Insider estimates it will bring in $25 billion business annually, with Google taking in only $300 to $500 million a year.

Compared to some of Google's other revenue streams, that isn't a huge moneymaker. But the DoubleClick Ad Exchange could help the company solidify its online advertising domination.

Yet another ad exchange sounds like another way to commoditize the process of selling display ads online, but Google thinks that their presence in display will help to curb the bleeding of revenue in the space. Neal Mohan, Google's VP of product management, tells Paid Content:

“The whole point is to create more revenue for everyone. Let’s say a site experiences a sudden rise in traffic due to some news event. They’ll be able to bid inventory that would normally sell their ad space for much more. Ad space that goes for $5 could suddenly sell for $10.”

We'll have to wait and see if they manage that.

Meghan Keane

Published 18 September, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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