Google has certainly got tongues wagging with last week’s announcement of its $3.1bn
buy. Some seem to think it’s got a bad deal while others believe that it’s got one that’s too good and is anti-competitive.
Others have been crying foul over various ‘conflicts of interest’.
The implications are broad-reaching, so let’s have a look to see how different parts of the industry have reacted, starting with Google’s big media rivals…
The deal is still subject to approval from US and European regulators, so Google’s big competitors have unsurprisingly been registering their complaints.
Microsoft general counsel Brad Smith, for example, said the acquisition…
“raises serious competition and privacy concerns. We think this merger deserves close scrutiny from regulatory authorities to ensure a competitive online advertising market.”
Aside from its noticeable lack of irony, the software giant is entitled to be feeling a little narked off.
It was the first to be named as a suitor when news leaked of DoubleClick’s sale plans, and has missed out on a golden opportunity to cap the growth of Google’s digital ad empire.
Microsoft’s interest – along with Google’s mountainous cash pile and the chance to instantly gain a big display ad client base – goes a long way to explain why Google was prepared to pay more than $3bn for a firm purchased for only $1.1bn in 2005. And that’s twice as much as it paid for YouTube last year.
The Times also ran an interesting article yesterday which suggested Microsoft matched Google’s bid but was snubbed, although we don’t know if the Redmond-based company offered the all cash deal Google was prepared to.
It is also not the only big media company to have expressed concerns about the potential impact of the acquisition.
AT&T head of legislative affairs Jim Cicconi said that small internet companies in particular could be affected by the deal, as “Google would be in a position to pick winners and losers [in the internet ad space].” He added:
“If Google becomes the dominant force in terms of web advertising and becomes the broker, that would be clear evidence of market power and dominant position.”
Agencies and advertisers
Much of the concern in the marketplace seems likely to focus on the effect the deal will have on the neutrality of Google’s sprawling portfolio of services, and whether it is equipped to take a sufficiently independent perspective of what is in an advertiser’s or publisher’s best interests.
Paul Mitchinson, UK MD of online marketing group DGM, said that that the DoubleClick acquisition “marks a significant U-turn in Google’s traditional philosophy towards banner advertising“.
He added: “Whilst the move is being viewed positively by some, questions have been asked about whether Google possesses the necessary skills and independent view to ensure advertisers, agencies and media owners achieve their online marketing and e-business objectives.
“Some industry commentators are worried that DoubleClick’s existing clients may start to feel that Google is using DoubleClick’s relationships to further its own advertising network whilst others are also concerned about the conflict of interest that will result from having to rely on the media owner’s tracking to attributable sales.”
Our recent search marketing survey shows that Google’s power is now being seen as a risk by some businesses. So although there will be concern among DoubleClick’s main ad serving rivals, such as Atlas, it will be an opportunity for them to market themselves as being in a better position to act in the best interests of both publishers and advertisers.
The flip side of this is that the deal could also potentially provide advertisers with a huge boost in efficiency through better online reporting capabilities.
Bradley Moore, media director at digital agency Blue Barracuda, said the move could be a “turning point” for the display sector if Google moves the industry closer to the Holy Grail of de-duped conversions across different online advertising channels:
“For us as an ad agency, it will hopefully provide us with a seamless tool for measuring not only search but also display ads.
“At the moment, it’s quite disjointed – our jobs are not getting any easier in terms of trying to fulfil that transparency. If they can put some currency into the space with some tracking technology that manages not only Adsense but also the display space, that will be the best thing that could possibly happen to the industry.”
There are plenty of sub-plots in this saga which are worthy of attention.
DoubleClick, for example, recently announced plans for an online ad exchange – but with Google behind it, will it get the backing of big publishers or ad networks?
Questions are also likely to be raised about the future of Performics, DoubleClick’s search and affiliate marketing agency.
247realmedia UK commercial director David Parfect said:
“How Google manage this is going to be very interesting. Performics can’t say they are engine neutral when they are owned by Google.
“The thought that Yahoo! or MSN will get equal treatment is probably a bit of a stretch, and that Yahoo! and MSN will still work closely with Performics is even more of a stretch. A sale will be imminent for Performics, otherwise it will not stand much chance in the market.”
Even so, in its five page Q&A on the buy-out, Google said it would not be “disposing” of the unit – whatever that means:
“Performics is part of DoubleClick, and we are acquiring it as part of the transaction. We have no plans to dispose of it at this time.”
Google and DoubleClick
For Google, the benefits of the deal are pretty clear – as they are for DoubleClick’s private equity investors.
It will extend its potential ad sales network, as well as offering it another opportunity to build up its agency relationships – something it has been focusing on recently in the UK.
Google is less willing to open up about how it will integrate its ad tools with DoubleClick’s services, but boss Eric Schmidt is unsurprisingly delighted, and outwardly unworried about the anti-competitive claims.
In a nod towards display advertisers’ need for greater optimisation, he said the…
“combination of the two companies will accelerate the adoption of Google’s innovative advances in display advertising.”
David Rosenblatt, DoubleClick’s CEO, added:
“Combining Doubleclick’s cutting edge digital solutions for both media buyers and sellers with Google’s scale and innovative resources will bring tremendous value to both our employees and clients.”
For those in a less celebratory mood, however, a poster on Digg sums the whole thing up nicely:
“The wheel always turns. Five years ago, nobody in their right mind wanted to ‘own’ ANY part of the internet. Seven years ago people would have said AOL owned the internet. Nine years ago, Netscape owned the browser market, they were even selling NN in shrinkwrapped boxes.
“You don’t like Google, just stay tuned. Somebody else will be on top in good time. Somebody hungry and smart.”