Monday, April 16, 2007

Google purchases DoubleClick, makes deal with ClearChannel

In case anybody still had doubts about Google's advertising ambitions, they announced a few deals over the past several days that will put them to rest once and for all. First, in an effort to solidify their position as the preeminent Internet ad engine (and to piss off Microsoft, I'm sure), Google plans to acquire DoubleClick for an insane $3.1 billion. Combined with today's news of a massive deal with Clear Channel to sell radio ads on their 1,650 US stations, and hot on the heels of a recent deal with EchoStar to sell trackable TV ads, the search giant is doing everything possible to diversify into other areas, since Internet search advertising still made up well over 90% of their revenues last year.

However, all is not roses for the do-no-evil company. First off, it's unclear whether the DoubleClick deal will go through (though to be honest I'd be surprised if it didn't). Microsoft, AT&T and maybe some others are already lobbying the State Department suggesting that Google's acquisition could give them an unfair advantage. While the notion of Microsoft calling somebody else monopolistic and anti-competitive is ironic (and that's putting it kindly), the suggestion is worth considering. Google already collects a huge amount of personal information from its search engine and affiliate advertising systems, and augmenting that with DoubleClick's technology could make things worse. How bizarre would it be to see Bill Gates and Nadine Strossen, President of the ACLU, showing up on the front cover of the Times together? I tried to come up with a pithy good-vs-evil metaphor to describe it, but I don't care for either of them very much, so my best one-liner involved Satan and a slightly less-evil Satan (which really isn't very compelling).

Meanwhile, both Google and DoubleClick have been experimenting with in-store media for well over a year, and of course Clear Channel is on an outdoor electronic billboard construction boom. Consequently, the consolidation of power here is something we need to be watching very closely. While I'm sure that the TV, radio and Internet advertising folks are much more nervous about this than we digital signage folk are (oddly, the small size of our market is a benefit in this case), companies that want to stay competitive will need a steady stream of market-centric innovations to stay relevant.

Tags: Google, DoubleClick, Clear Channel, retail media

3 comments:

Anonymous said...

Google isn't doing very well with TV or radio so far. Why are they bothering with Double Click? It won't help them there.

Bill Gerba said...

Well, it's not like they can only do one thing at once. They've simply expanded their core competency to include radio and tv advertising instead of just internet, but that doesn't mean they're quitting the Internet biz (since it accounts for over 90% of their revenues right now).

DoubleClick can provide them with an even bigger footprint on the Net than they have already, and Google hasn't exactly been shy about taking existing technologies and integrating them into their own systems.

Rob Gorrie said...

Hey Bill,

I'm with Anonymous. I'm tickled that they're making noise in our space as it only adds legitimacy to our business but as a whole, their efforts outside their core business have been weak at best.

As much as it's a nice, really cool concept, Google's got issues in any space other than search and Double Click doesn't help them:

1.) For experienced search marketers, Google's click-fraud can be up to 50% - which would be a great reason for them to know they have to diversify and find new verticals...if 50% of your revenue is fraudulent...or let's say 20%, you can imagine when that really comes to light what that will do to not only stock price but future business

2.) Omnicom, WPP, Interpublic, etc aren't going to be lying down on this one. e.g. OMDs $10 billion in revenue isn't going to magically decrease because Google can let some VP Marketing buy his own ads. It may put downward pressure on media but ultimately that's a bad thing...it's the Wal-Mart effect of the media biz....OMD will just take it out on the media properties themselves

3.) As Dave Haynes says, very little of the major advertisers actually use Google as a major advertising channel (media % wise)...it's a curiosity that's left to the SMB and mid-tier marketers. If I'm a brand, I hire media companies to be my experts and help me focus my spend strategically. Google is "all tactics"

Just mt 2 cents

Rob