Google’s acquisition of Doubleclick is probably their most significant to date. The search giant’s failure to persuade the marketing community to adopt their display advertising products put them behind both Microsoft and Yahoo in integrating search and display, and was beginning to concern the investment community.
With one deal, they hope to address this – allowing them to adopt the position of intermediary between advertisers and consumers in display that they have so successfully established in search.
But some publishers are crying foul, and agencies and advertisers are also concerned. Is this a good deal for them, or is Google going to use the potential monopoly it gives them to disempower advertisers and publishers to their own advantage?
Doubleclick’s business is roughly 50/50 split between providing adserving solutions for publishers, and for advertisers.
Publishers are concerned about the potential conflict of interest that Doubleclick will be faced with. Google are a major competitor to (as well as a major revenue source for) many online publishers, and their worry is that by handing information about their clickthrough rates, traffic and audience to a Google company, they’re boosting Google’s ability both to compete with them as a media owner and negotiate with them as a supplier of search listings.
Having said this, Doubleclick is unlike many of the previous acquisitions Google have made – it makes money. Having just agreed to hand over $3.1bn to buy it, observers hope that the new owner won’t want to kill the goose that lays the golden egg. But the revenue from this service is small compared to Google’s overall income, and for many publishers, hope won’t be sufficient reassurance.
One of the spurned suitors, Microsoft, is pushing for the competition authorities in the US and the EU to step in and call a halt to the deal, alleging that it will give Google control over 80% of advertising seen by consumers. Setting aside the irony felt at Microsoft calling ‘monopoly’, and ignoring the sour grapes that losing the deal is understandably making them feel, they’ve probably got a point.
Meanwhile advertisers and agencies are also troubled. Their approach to media has always in part been strengthened in negotiations by the fact that they knew one or two things that media owners didn’t. They knew conversion data by site, and they knew the cost of alternatives. Armed with either, any half decent bluffer could succeed in a media negotiation.
So having one of the world’s biggest media owners take control of all this data is not going to go down well at all.
Advertisers are seeking reassurances not just that their data will remain theirs, but that Google will have no access to it. Along with agencies, they want to know that Google’s expected future position as a major supplier of display advertising won’t be bought at their cost.
Whilst most who use DoubleClick will have already covered data rights in their contracts, the concern is that if Google can build a dominant market position in adserving, they may seek to use this negotiating strength to demand more data sharing in due course.
All of this is good news for Doubleclick’s adserving competitors, some of whom saw their stock leap 10% on news of the acquisition.
Terry Semel, CEO of Yahoo – another spurned suitor – speaking in the New York Times last week, saw the deal as validation of Yahoo’s strategy of bringing search and display together. But he also put voice to others’ expectation that some of Doubleclick’s customers would not be happy.
So the jury is very much out as to whether this deal is good news for Doubleclick’s customers. For all of its success attracting advertising spend, Google may have marketers’ respect, but it has done little to earn their trust.
Doubleclick may succeed in retaining the bulk of its customer base over the next few weeks, but its new owner is going to have to tread carefully if it’s going to avoid creating a rush for the alternatives.