April 15, 2007 |
The scoop of the last few days has been the Google acquisition of DoubleClick for a reported $3.1 billion. This acquisition gives Google access to DoubleClick's advertising software and their relative position with Web publishers and ad constituents.
DoubleClick works ad displays for sites like MySpace and AOL. The most significant aspect of this deal, beyond the $3 billion price tag, is the fact that Google and Microsoft have been in a duel for online ad revenue and Google is slamming Microsoft so far. People seem surprised that Google outbid Microsoft and many are counting this victory as a giant loss for Microsoft.
The deal certainly puts Google in an advantageous position to expand their business into the banner ad realm, a position they have been actively seeking for some time. According to the NYT scoop on this story, this acquisition represents a major setback for Microsoft, which has been chasing Google for online ad revenue.
DoubleClick ad revenue was around $300 million last year according to a post by Pete Cashmore, this article also points out one really negative outcome for Microsoft if they do not get their ad act together soon. My rather simplistic logic on this subject takes into account exactly what $3 billion dollars might be able to accomplish outside of buying some rather Web 1.0 banner advertising, contacts and software.
Opinions on the deal are varied, of course, and fans of either entity are analyzing the "what ifs" as usual. Pete pointed out something else that is interesting in that Google is undertaking this latest shopping spree with cash rather than stock options. I tend to take everything as symbolic and this indicates that Google is much more liquid than many people thought.
DoubleClick is a money making machine for sure, but is it a Web 2.0 machine and will it take 10 years for Google to get their money out of it? I am sorry, but the banner ad business is going to go bye bye in its current form in my opinion. The clients are really the big news of this acquisition. Both Google and Microsoft have bagged their limit of "foul ups" lately and I tend to side with the people who think Microsoft just did not think DoubleClick was worth that much.
In a practical sense, one has to think of what kind of investment or innovation "anyone" could facilitate with $3 billion bucks in cash! As a bet with Google, I think I could take $3 billion or less with my current online buddies and make something quite extraordinary. Time will tell whether Microsoft is screwed or just not stupid I am sure, and it won't take 10 Web years either.