Google Agrees to Buy DoubleClick for $3.1 Billion
April 13, 2007
Google Agrees to Buy DoubleClick for $3.1 Billion
April 13, 2007 5:47 p.m.
Google Inc. reached a deal to purchase Internet ad-services company DoubleClick Inc. for $3.1 billion, marking one of its biggest acquisitions.
The price represents a stunning change in valuation for the company, given that it fetched $1.1 billion in 2005, and has since sold off parts of itself to other parties. Among others, Microsoft Corp., had been vying for control of New York-based DoubleClick, which is controlled by San Francisco private-equity firm Hellman & Friedman.
Even as the Internet economy enters its second decade, the price shows just how valuable key market positions can still be. In adding DoubleClick, Google pushes deeper into the business of placing, or “serving” the electronic advertisements that dot Web sites. But it will also complicate Google’s already fraught relationships with Web publishers, who often rely on Google for advertising revenue and traffic, but fear that Google’s ever-growing market power may somehow crimp their own growth plans.
In addition to ad-serving infrastructure, DoubleClick brings a vast list of relationships with Web publishers and advertisers that Google can try to exploit to improve its online ad offerings farther beyond the small text ads that it places alongside search results. Customers include Time Warner’s AOL and News Corp.’s social networking site MySpace. The company also runs a service called Performics, which among other offerings, works with advertisers to help place ads on Internet search engines, such as Google.
Many Web publishers rely on ad-serving services such as DoubleClick’s to insert ads on the fly when a visitor pulls up a Web page. Some advertisers and their agencies rely on DoubleClick to deliver their ads to be served up to the Web pages.
The ad-serving DoubleClick does would be an obvious complement to Google’s push to sell more graphical and video advertising. Google currently serves ads for other publishers when it has sold the ads for them through its online advertising system, but generally doesn’t serve ads that weren’t bought through its system. People familiar with the matter say Google has been preparing a service that could serve ads on sites for Web publishers even when Google itself hasn’t sold the ads.
The deal comes as Google also expand its ad-brokering services into offline media, such as print, radio and television.
The agreement marks the second time that Google has outdistanced Microsoft, which in 2006 beat out the software maker for a partnership in AOL. Some Microsoft executives are convinced Google is making such investments mainly as a defense against Microsoft and others.
Losing DoubleClick also adds a roadblock to Microsoft’s goal of entering search and advertising areas that Google hasn’t staked out yet. Doubleclick would have given Microsoft instant entry into the market for running ads on other companies’ Web sites. Now Microsoft may have to build its own service if it decides to compete. That approach has proved difficult to Microsoft, which has poured money into its own search engine and online ad system to little success.
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