Google's Continental Breakfast
By
Rick Aristotle Munarriz
March 6, 2008
|
It seems as if Google's (Nasdaq: GOOG) $3.1 billion acquisition of DoubleClick is finally going through.
Reuters is citing "people familiar with the situation" in revealing that the typically stingy European Union will provide unconditional approval for the deal.
It's about time, really. The buyout was announced 11 months ago. In that time, Microsoft (Nasdaq: MSFT) paid nearly twice as much for aQuantive and Yahoo! (Nasdaq: YHOO) has sealed the deal on several smaller interactive marketing outfits.
Naturally, Google is going to be watched more vigilantly, given its global dominance in online advertising, where it outsells both Microsoft and Yahoo! combined. It's the price that Google must pay for its success.
Will this make it harder for Google to snap up other decent-sized Internet advertising specialists? Of course. If striking a deal with Google means delayed closings and the potential of regulatory derailment, Big G will have to bid a premium for future acquisitions if its rivals are holding up bidding cards.
Let's just hope that DoubleClick is worth it. The one thing that is certain is that DoubleClick will fortify Google's position in display advertising. Google's stronghold has been text ads, which are easily created by anyone with keyboard-pecking skills. Companies like DoubleClick and ValueClick (Nasdaq: VCLK) have a healthy presence in graphical spots that are trickier to target given the limited inventory, but have the eye candy that is typically preferable in tough-to-monetize sites like social networking and gossip rags.
Google realizes that it needs to get up to speed in display advertising. Whether it's through its own video-sharing workhorse, YouTube, or through social networking with its own Orkut and News Corp.'s (NYSE: NWS) MySpace, a dearth of interested click leads opens the door for impression-based brand awareness ads that pack a graphical punch.
So go ahead and eat up, Google. Savor the DoubleClick. Enjoy it too, because it may be a long time before your next substantial swallow.
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