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Mar. 24, 2008

Google's $3.1 billion acquisition of DoubleClick finally closed last week with Europe's regulators approving the deal. This gives the search giant a much needed push in the market for display advertising.

So far, Google hasn't given any details as to what plans it has with DoubleClick, other than to hint at some layoffs. However, some Google pundits have voiced concerns and a few opinions about what Google should do about its new acquisition.

There's also the problem of conflict-of-interest issues with some of the additions to Google. As the largest search engine, Google has kept its distance from search engine optimization. But with Performics, Google now owns an SEO company.

Danny Sullivan says "even if Performics is kept completely separate from the Google search team, there's the impression that Performics might have some special rights with Google's non-paid search results."

Now Microsoft finds itself in the same SEO-owning boat after acquiring Avenue A/Razorfish and Sullivan poses this question to both companies: "You now own the whole pie. Do you really need to sell the pie cutters as well?"

There's another conflict Google bumps up against with DoubleClick and it's the fact that it risks alienating advertisers who don't want Google to have too much control. Google could integrate DoubleClick's Dart ad management and serving technology into AdWords to offer one unified dashboard and see into even more Web sites across the Internet.

Also, Google's AdSense program serves up PPC (pay-per-click) text ads to websites within its publisher network, while DoubleClick, which markets a product called Dart, places banner ads on the sites. DoubleClick runs an advertising exchange and a search-engine marketing business called Performics on top of its usual ad services.

Jim Barnett, chief executive of Turn, an automated online ad market says "this merger will cement Google's position as fried-enemy with major Internet publishers."

Additionally, there's also the question of whether Google will continue to restrict its own customers from working with third-party ad servers.

Michael Cassidy, chief executive of online ad network Undertone Networks says "overall, advertisers working with Google couldn't use third-party ad serving, so a lot of people wouldn't use Google."

What's more, Google has to accurately determine what the best business model is for ad serving. DoubleClick charges customers for it, but Google is testing a free ad management service called Ad Manager.

Ruben Buell, chief executive of AdShuffle says "our clients on DoubleClick that have contracts expiring with them are saying it's a dead end, and that it will be eclipsed by Google technology, which will severely impact customers."

And beyond the technical integration issues, the two merged companies face a culture clash! It's "Madison Avenue hipsters" meets "Silicon Valley geek types," according to some advertising industry observers.

Buell added "display is more brand advertising, more emotional. I think it's going to take Google some time to learn that side of the business because they're so data driven."

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Source: Tech Blog.