Add to del.icio.us     Digg this

April 16, 2007

Late Friday, Google said it will acquire Internet services firm DoubleClick, for $3.1 billion. This marks another important acquisition right in the center of the Internet economy.

Overall, taking into consideration that DoubleClick was valued at about $1.1 billion less than two years ago, and noting that has since divested itself of some of its divisions to other parties, the acquition price tag represents a notable increase in the valuation of the company.

After all, Microsoft had been wanting control of DoubleClick, which is controlled by San Francisco private-equity firm Hellman & Friedman.

The agreed-upon acquisition price represents about an 800 percent return for DoubleClick's current owners, who paid less than $331 million for it at the end of 2005.

As the Web economy enters its second decade, the price tag reveals just how valuable some Internet companies can be.

In adding DoubleClick to its arsenal, Google forays deeper into the business of placing the electronic advertisements that now garner so many Web sites.

However, this also further complicates Google's already delicate relationships with many of its Internet publishers. Some of Google's Web publishers often rely on Google's AdSense ads for advertising revenue, but worry that Google's ever-growing footprint may somehow further complicate their own growth plans internally.

Singlehandedly, this acquisition requires some analyzis. Will Google make this new service free? Did it acquire the service mainly for the data about display advertising?

Also, getting its hands on such data would indeed help Google in some of the other areas it needs to focus as well.

Some industry observers think the acquisition price is well above so-called whisper numbers of a few days ago.

So, did Google once again outbid its competition? The transaction is to be done all in cash, no stock.

This time around, Google might have a tall mountain to escalate with some of its display advertisers, given the many ramifications DoubleClick already has with most of its current advertisers.

Will those advertisers trust Google? Some sources speculate that Google was already building its own version of a similar DoubleClick platform.

Add to del.icio.us     Digg this

    This article was featured on Business 5.0.

Source: The Wall Street Journal and Battelle Media