Did Something Happen with Google and DoubleClick?

I’m not sure because it hasn’t been on every frigging blog in the past 12 hours…

Nutshell:

Google reached an agreement today to acquire DoubleClick, the online advertising company, from two private equity firms for $3.1 billion in cash, the companies announced, an amount that was almost double the $1.65 billion in stock that Google paid for YouTube late last year.

Much of the angle so far is ‘ooh they sho nuff burned MSFT’ by snatching the DoubleClick company away from a Microsoft acquisition.

Rxns:

Allowing so much of the online advertising pie to be controlled by a single company, Google, could put online publishers at an unfair disadvantage once the dust settles and the price wars begin. As an Internet publisher, getting your ads from anywhere “but� Google just became much more difficult.

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One thing’s for sure, this is a blow to Microsoft – whose AdCenter product was designed as a direct competitor to Google’s Adsense/AdWords. But now Google has – yet again – trumped the competition (Microsoft and Yahoo) by taking its online advertising technology into new territory.

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when it comes to finding buys that can make Google more valuable, they are crazy as a fox. Google probably found the best third-party ad serving prospect outside of AOL’s Advertising.com and spent the money for it.

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Not only double the size of Youtube, but the whole $3.1B was in CASH. Compare that to Youtube, where only $15 MILLION of the $1.6B deal is in cash. Google can’t just churn out more stock to cover this deal…they had to dig into their cash reserves (of which, admittedly, they have a lot.)

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“They can see the entire marketing funnel from beginning to end.” With Checkout, Google even has a fast, automated payment mechanism.

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Also worth noting is the amount of money Google is ready to spend on advertising companies; remember that one of their last acquisitions was AdScape, a company that provides in-game advertising. Nominally, Google may be a search provider, but it seems to me that they’re primarily in the business of advertising.

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Many of Google’s purchases are about data. The more data they collect, the better the ads and search results they serve. I wonder if this will finally raise the eye of regulators. There’s no clear anti-trust conflicts here (at least to a layman like me). However, as Google grows and it gains more power, so will the government’s watch.

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Google will be having 1,200 more employees after the acquisition, calling them the DoubleClickers? 🙂

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Jumpstart Google’s brand advertising efforts. “Google really wants to get into the display advertising business in a big way, and they don’t have the relationships they need to make it happen,â€? Dave Morgan, chairman of Tacoda.

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[comparing DoubleClick vs Adsense] DoubleClick made a huge strategic blunder. They saw their adserving technology as something to be sold modularly rather than bundled with their ad network. They became a provider of commoditized technology and lost its ability to insert itself between the buyer and seller of advertising. It no longer controlled pricing and placement of ads. It quickly failed to become a NETWORK (with network effects) but became an ASP.

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About Andy Wibbels

Andy is an award-winning blogger and author of the book Blogwild! A Guide for Small Business Blogging. His work has been featured in The Wall Street Journal, USA Today, Entrepreneur, Wired, Business Week, Forbes, and other national and international media. He was worked at several San Francisco startups including Get Satisfaction, SAY Media, InMobi, Keas, and Mindjet. Currently, Andy is Director of Marketing at Lucidworks. Tw · Fb · G+ · Li

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