Google acquired ad company DoubleClick for $3.1 billion, by far its biggest ever acquisition. They were hoping to take up a great deal of the display ad market online and their stock soared as a result to $595.
Since then its stock hasn’t moved much, closing at $592 on Mar. 9. Google’s ad practices have angered privacy advocates and attracted the attention of antitrust regulators in the U.S. and Europe, writes Brad Stone. The competition has changed a lot, too. Back then Yahoo! was the biggest player in the fragmented market for display ad dollars; now Microsoft is a serious contender. Facebook has become a Mad Ave-friendly colossus worth $75 billion by some estimates, and Twitter is poised to grab a larger share of marketing budgets. Even Apple has gotten into the display advertising game with its iAd program for mobile devices.
Google still declares it one of their best acquisitions ever, and that it brings in $2.5 billion annually, reaches 80 percent of all Internet users and that 99 percent of its 1,000 largest advertisers run display spots as well as text-based search ads. Of course, many analysts observe that roughly half of that income for display ads comes in from YouTube, and would likely be producing the income it is without DoubleClick.
There is also a division that deals with monitoring how people use the Internet that comes from DoubleClick that Google is now using. The acquisition has led to more outcry over Internet privacy, though Google says most users don’t opt out of tracking and that it makes for a more relevant, better experience for all.
The biggest threat to Google’s display ambitions may be Facebook, notes Stone. The social network will bring in revenue of around $4 billion in 2011, according to research firm eMarketer, almost entirely from the small, ignorable display ads it runs on its members’ pages. Those ads are sold by Facebook itself, which doesn’t allow Google into its rapidly growing universe of over 500 million members.
Susan Wojcicki, the Google senior vice-president who spearheaded the original DoubleClick acquisition, doesn’t seem to be worried, saying, “Facebook will definitely do interesting things and has an interesting perspective. But the Web is a really big place.”
Source: Business Week