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Empire Building at Google? April 14, 2007

Posted by K.C. in advertising, allances, Marketing, media, Merger.

Recently, Google purchased DoubleClick, an online advertising company, for $3.1 billion. This is yet another large purchase from Google who paid half of that for YouTube last year. DoubleClick is one of the top online advertising companies who specialize in software for display advertising and has close relationships with various web publishers. For some time now, Google has had its eyes on DoubleClick because of their success in display advertising. Display advertising is essentially the picture ads on the banners and sides of websites. While Google is also an expert in online advertising, they have not been able to capture every aspect of online advertising. Google’s advertising strengths lie primarily upon small text ads that pop up when a user completes a search.

 DoubleClick’s strengths on the other hand, “…lie in flashy banner ads and, more recently, video ads that are more like high-end magazine or television ads.”  

 Purchasing DoubleClick means that Google will be able to track user patterns much more closely in an attempt to produce smart ads that are based upon a user’s interests and search habits. As usual, analysts argue that $3.1 billion may be excessive but DoubleClick had similar offers from Microsoft, AOL, and Yahoo, its closest rival.


In the eyes of internet users, online advertising may seem ineffective but with this large purchase of DoubleClick, Google may know yet another thing we don’t.



1. Kira - April 16, 2007

Although expensive, I think the purchase of DoubleClick is a good move for Google. If other well regarded companies such as Microsoft, AOL, and Yahoo were willing to pay a similar amount, then DoubleClick must really be worth it. It seems like Google is trying to keep up with the competition.
However, I am still skeptical of online advertising. As a frequent internet user, I never pay attention to any advertisements online. What exactly are all the benefits that Google will reap from having online advertising? Why didn’t Google want to come up with their own advertising rather than spend 3.1 billion on DoubleClick?

2. Brian Mulligan - April 16, 2007

In reponse to Kira’s comments, Google did a different type of advertising than DoubleClick. It seems that DoubleClick has more flashy advertising that Google hadn’t mastered yet. The cost of trying to research and create system like DoubleClick’s may have been more than purchasing DoubleClick’s system. They are leaders in the online advertising and I feel that Google wants be the leader in so many different fields.

As for the first question, I’ve never really understood online advertising. I never really look at online advertising because they all seem to be scams. I wonder if there is any empirical evidence about the effectiveness of online advertising. Google must understand how it works and it must be effective to pay so much money.

3. collage9 - April 17, 2007

No matter what type of advertising DoubleClick does, I question if this is indeed a good move for Google. I too never pay attention to these flashy ads that appear on websites. It seems as though a lot of other people are the same way. If no one looks at these ads, then what is DoubleClick going to do for Google? I guess we’ll have to wait and see.

4. Stacey Swift - April 17, 2007

As Brian said, Google knows what they are doing. I trust they believe the $3.1 billion investment will pay off in the future. Like I have said before, I don’t really understand online advertising either because I try not to pay attention to it, but I guess it really does work if so many companies rely on it for funding.

5. Charley S - April 18, 2007

Well it’s now pretty apparent where all the money from Google’s IPO is going: into buying out innovation on the net. This strategy I beleive can produce short term positive results but, I feel that if Google is having trouble with innovation it may want to improve its in house process. There’s only so much that Google can buy out, and the cost seems to be extremely high to buy out companies such as double click especially when a bidding war may develope between big rivals. Is Google trying to become as dominant as Microsoft? It looks like it.

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