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Oct. 28, 2007

According to various reports, Google is reasonably confident that its $3.1 billion bid for ad tracker DoubleClick will go through as originally planned.

However, some advertisers are now voicing concerns that Google's acquisition could potentially reduce competition on a global scale. Microsoft and Yahoo also have complained about the deal because it will surely make Google a lot stronger.

Additionally, some consumer advocates are now worring about privacy issues. The European Union's executive arm has a Nov. 13 deadline to clear the deal or open a fuller inquiry that could take up to four more months.

The committee won't examine the privacy concerns but will stick to how the deal affects the overall market.

An observer that is familiar with the issue said "both of the antitrust authorities that they've dealt with say that they're applying standard economic analysis. On the basis of conventional economic analysis we think the deal should go through anyway."

DoubleClick places ads on Web pages that target specific consumers, generating money for smaller publishers.

On any given day, DoubleClick helps its customers place and track Internet advertising, including ads alongside search results, which Google has turned into an extremely lucrative business.

Google chief economist Hal Varian said the deal offers a lot to advertisers and the websites that show ads because Google and DoubleClick together would run a better and leaner operation that will cut costs, and help place more ads on other Internet properties.

Varian added that one of the benefits the new company would offer advertisers would be "unified reporting" to show exactly what online ads were pulling in new business.

"The way the technology keeps getting cheaper, I would expect to see overall advertising costs in the industry going down in the future as they have in the past," said Varian.

"Overall, one of the downsides of using many different ad providers is that you get many different and varying reports, and you also have to figure out how to consolidate all of that. We want to make it easier for advertisers to use these new services," added Varian.

Varian mentioned two other potential deals consolidating the ad industry:

To eliminate any potential antitrust concerns, the European Union Community can ask companies to consider divesting itself of certain units or maybe changing the way they do business.

Federation managing director Stephan Loerke says that "by far, Internet marketers have largely benefited from innovation generated by intense competition. Overall, advertisers worldwide are keen to see this competitive marketplace maintained, and are also eager to see it grow as well."

Again, Varian stressed that the Web ad business was wide open because neither advertisers nor publishers are tied to a single provider.

"Google and DoubleClick would open new markets, at Internet sites that don't have concerted strategies like big portals or newspapers do," added Varian.

"If you have ad space but you don't have ads to put in it, we've got relationships with hundreds of thousands of advertisers and we can find ads to fill up that space for you," said Varian.

Late last week, Google pledged not to change certain DoubleClick business practices but refused to give any specific details.

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Source: Information Week