Google’s policy appears clear: if you can’t buy them or extinguish them, you better partner them. This is exactly what it did with Facebook (FB - Free Report) in October last year when everyone was moaning about the growing competition from the social networking company. And it’s doing it again now, with Yandex and its real-time-bidding platform.
Real-time bidding is another name for programmatic buying where advertisers get the chance to bid in real time for a particular impression. Obviously this means the utilization of a technology platform that automates the bidding process. This is what an ad exchange or demand-side platform is all about.
An exchange typically brings on a large number of bidders for each impression, thereby driving up prices. Conversely, it also increases the amount of inventory, which has to be managed effectively to ensure that prices don’t come under pressure.
What Google’s doing with Yandex is simple: its combining the DoubleClix Ad Exchange with Yandex’s system called AWAPS. This essentially makes for a bigger marketplace and allows Google to access a market that is 60% owned by Yandex.
As a result, advertisers on Google’s platform get to target the largest chunk of the Russian market, while those on the Yandex platform gain access to Google’s global presence.
It certainly looks like a win-win situation and we will be keeping an eye on Google’s results to see if there’s a notable impact.
Speaking of which, Google has been growing quarterly revenues by strong double-digits for quite some time now, no mean feat considering the growing competition, its leadership position and the constant talk about privacy concerns. But that is the name of the game that Google plays better than everyone else.
It’s not been as lucky on the bottom line however due to pricing concerns, increased investments and the shift to Enhanced Campaigns.
Google carries a Zacks Rank #3 (Hold), which lags Baidu’s (BIDU - Free Report) Zacks Rank #2 (Buy) only because of the latter’s position in China. Facebook with its Zacks Rank #2 (Buy) is also worth considering.