Recently I wrote about the merger between Google and DoubleClick and subsequently I decided to get an outside perspective on this acquisition from Tim Vanderhook, CEO and founder of Specific Media a company specializing in behavioral targeting of advertising in its own advertising network.
What is the general impact of this merger?
Google has probably been studying over the past year or so the impact that display advertising has on search advertising. The two are very closely tied together with display ads fueling search ads for advertisers. Because Google has such a dominant position in the latter, they are moving quickly to make the weakest part of their business a strength. This deal is not so much about targeting as it is about display advertising, it is getting more widely understood by advertisers that display advertising is the driving force behind people making searches. Previously all the credit went to the search engines for producing a great ROI, now advertisers have recognized that banner ads actually drive the intent of the user to perform a search and Google is really just the conduit to get to a website. Because Google has such a dominant position in search marketing, they fear that search may be looked at less favorably in the future and are moving now to protect that.
Are there privacy concerns now that Google has more access to user data?
Google already has access to a ton of web surfing data on users and certainly this will add more data into their organization. Google’s do no evil mantra will start to be challenged in the future as they start to use this data to serve behavioral targeted ads. There is no doubt that the online advertising industry is moving in this direction and consumers will certainly feel a bit vulnerable, however, all of this data is anonymous surfing data and is not very harmful when trying to serve relevant advertising.
How will this acquisition affect Google’s competitive advantage?
Certainly having access to greater user data, specifically the types of content that a user reads when they are outside of Google.com, as well as, which ads a user finds of interest. This acquisition buys them credibility in the display advertising market for acquiring the marquis brand in display advertising. However, this acquisition is not plug-and-play for Google like Advertising.com was for AOL. They are attempting to get into the market by purchasing an ad serving technology, they still need to forge relationships with major publishers on the display side of the business to get inventory to resell. This strategy will prove to be an uphill battle and for $3.1 billion in cash that hill just got a lot bigger.
Will any current DoubleClick customers defect?
As with all acquisitions there will be some fall out but I wouldn’t expect any massive defections, a major portal might move but I think the majority of customers will stay. Don’t be surprised if you see Google pull its marketing magic on this one to keep customers happy – "Free Google Ad Serving with advertisers to fill whatever the publisher doesn’t sell?" I wouldn’t count this out… The ad serving business in the end is just a commodity that uses bandwidth and Google’s got plenty of it to go around.