Google reached an agreement today to purchase DoubleClick for $3.1 billion according to the New York Times. This is a significant accomplishment for Google as Microsoft too was interested in acquiring the display advertising server company.
DoubleClick serves the needs of a variety of advertisers and publishers and is the leader in the online ad serving space. While Google has excelled at pay per click advertising they have not done so well in display advertising as in the display ad world, existing relationships are an important component of sales.
Google now has access to top publishers and advertisers and has the top relationships in the market.
The search engine leader will also be able to take advantage of the DoubleClick’s recently debuted advertising exchange which is similar to Google Adwords for display advertising.
It is possible this new exchange can be linked into the network of advertising services Google already offers allowing advertisers to manage display ads and ppc ads via a single unified interface.
The barrier to entry for others to compete in these spaces has become even more significant as Google now owns the lion’s share of ppc and display advertising relationships.
The single downside to this deal may be with DoubleClick customers which consist of advertisers, ad agencies and publishers. The latter two see Google as a potential threat and may decide it makes sense to migrate their advertising programs to another provider to avoid enriching what they view as one of their primary competitors.
However it is too soon to see if this will indeed happen. Over the course of the next few months we will get to see how Google manages this transition and what assurances it makes to existing DoubleClick customers to stop any potential defection.