Google to Acquire DoubleClick For $3.1 Billion In Cash
In a move predicted by R/WW's Sean Ammirati and The New York Times a week or so ago, one of the big Internet companies has acquired online advertising system DoubleClick. And the buyer is none other than Web 2.0's big spender, Google! According to the press release just out:
"The acquisition will combine DoubleClick's expertise in ad management technology for media buyers and sellers with Google's leading advertising platform and publisher monetization services.
The combination of Google and DoubleClick will offer superior tools for targeting, serving and analyzing online ads of all types, significantly benefiting customers and consumers..."
This is a huge deal - because for DoubleClick, Google is paying nearly twice the amount it paid for YouTube late last year ($1.65B in that case).
The deal appears to have been hastened by DoubleClick's announcement earlier this month that it plans to launch an exchange for online advertisements. Sean analyzed this development on 4 April, noting that it may lead to more profitable monetization of online ads. As if Google isn't profitable enough already in that department! One thing's for sure, this is a blow to Microsoft - whose AdCenter product was designed as a direct competitor to Google's Adsense/AdWords. But now Google has - yet again - trumped the competition (Microsoft and Yahoo) by taking its online advertising technology into new territory.
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Richard - why is it when Google spends "crazy" money - everyone always thinks MSFT and Yahoo lost. Did they really lose when Google bought that "billion dollar lawsuit" called YouTube.
Do you ever wonder if MSFT and Yahoo show up for the auction just to get Google bidding higher and walk away - they never intended to buy - just make Google spend the money. Why is is none of you ever look at that scenario.
Has anyone really taken a look at DoubleClick's claim on an on-line ad exchange. Please... you guys need to do some analysis - present your assumptions and the facts - and not just your conclusions.
Is it that much? If DoubleClick has US$301 million revenue, a ten-fold premium on that seems OK (we're talking US billions here, and not UK ones, right?)
G, I take your point in the last paragraph (this post is what you get after 13 hours in an airplane and no sleep).
But note that I never said MS and Y! "lost". What I did say was that Google has "trumped [i.e. one-upped] the competition (Microsoft and Yahoo)" with this move -- which is a different thing.
I think that the deal should accelerate consolidation of the Internet advertising market. It would be interesting to see what small online advertising networks are going to do next.
Richard,
I beleive Philip Hammarskjold, Managing Director of Hellman & Friedman made the right move of acquiring DoubleClick in 2005!
I agree with Juha's comment, is a company worth that much with relatively less revenue?
Again this is a consolidation move and i guess this will make Google the 'adSense king' for a while!
I believe the company really hit hard is Microsoft. Yahoo already owns part of Right Media (which has to feel good about that deal.)
Microsoft is still trying to play catchup in the ad network space and now their competitors (Y/G) are moving on to staking positions in the ad exchange space. (My post Richard referenced has a good description on the distinctions between a network and exchange.)
Also, keep in mind that while DoubleClick does have $301M in revenue -- they have said they anticipate the bulk of their revenue coming from the exchange they announced earlier this month in the future.
It definitely is a fun time to be in the online advertising space!
MS should get Atlas and Eyeblaster. Either of them individually is a significantly better product than DoubleClick. Reality is that DoubleClick wanted to sell out now, as they're not really getting huge traction outside of the US. Atlas rules in Europe; Eyeblaster and other local players are huge in APAC, which is the rising market. Under Google's aegis DoubleClick may get better (one hopes, given the astonishing facelift Google gave to an ordinary Urchin, for instance) but Microsoft could take Eyeblaster places. This is not as huge a loss as you guys make out to be. Look at the revenues, and more importantly, the presence of alternatives. Microsoft needs to lap up some of the competition and it will do fine, if not better.
Microsoft can still catch up. There are plenty of other companies to pick up. Microsoft hasn't made this enough of a focus yet.
DoubleClick's Dart Motif is a long way ahead of Eyeblaster now. Their serving/measurement/analytics/reporting platform is king. Google has bought this company for a very fair price.
Google really has a lot of money for buying an advertising company. I was reading about Google buying DoubleClick in the paper yesterday.