14
Apr
2007

Google Gets DoubleClick

April 14th, 2007 at 06:41 pm by Nilesh in Google

Late Friday evening Google announced it had agreed to purchase graphic advertising supplier DoubleClick for $3.1Billion. The acquisition is Google’s largest purchase to date, giving it access to the lucrative display ad market. The move also gives Google the final piece in its quest to dominate every aspect of online marketing. Before the purchase, Yahoo! was the clear leader in the display advertising market place.

Google’s purchase of DoubleClick comes at the expense of rivals Microsoft and Yahoo!. Both were said to be in the running to pick up DoubleClick. As with the AOL advertising deal in early 2006 and the YouTube acquisition in the summer of 2007, Google entered negotiations late, pulling its acquisition target away from its competitors.

DoubleClick serves banner and display ads which tend to be favored by large corporate brands. Display advertising accounted for more than 50% of the online ad-spend in 2006. DoubleClick also possesses robust ad-targeting and analysis capacities that will strengthen Google’s abilities as it moves towards print, radio and television advertising.

According to Google CEO Eric Schmidt, “The DoubleClick platform touches so many of the existing Google customers. It accelerates our entry into some of these markets by several years.”

DoubleClick was founded in 1996. It is the most successful of the old-time online ad agencies. It acts as the go-between for web publishers, marketers and ad agencies and boasts over 1500 corporate clients.

Google is paying over 20 times DoubleClick’s revenues from last year and triple the amount DoubleClick was last bought for by the private equity firm Hellman and Friedman in 2005. GOOG shares were down $0.55 in after hours trading, likely due to uncertainty surrounding the strength of DoubleClicks revenues.

“When we looked at DoubleClick, we felt after a very detailed financial analysis that we could afford the price,” Schmidt said. “And in fact it is a very good deal for our shareholders.”

The purchase gives Google a virtual monopoly in the online advertising market and makes the Mountain View company the largest online advertising concern. It also removes one of the final competitive threats to Google’s continued financial growth, while putting both Yahoo! and Microsoft in very difficult positions.

The $3.1billion purchase price is nearly three times what Google paid for YouTube in August 2006. If approved by the Federal Trade Commission, the deal will put Google far ahead of any online advertising competitor.

Source

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