Google buys doubleclick and KO’s Yahoo and Microsoft.

Well google did the right thing and bought doubleclick for 3.1 billion on friday.   People are saying that google bought the company for its advertiser and publisher relationships, I highly doubt that.

This deal will have major impact on adsense and publishers.

1.  Double click can IP/frequency cap,  adsense currently can’t.      For monetizing social networks or any large site with high pageview to unique user ratio  you can dramatically increase earnings using capping.  This means you can set your CPM based ad buy to only display to a person 3 times in one day not 50.

2. Doubleclick is an inventory management system.    It allows you to slice and dice your inventory and makes you a LOT of money if you use it. 

Yahoo has been working on YPN for years and they still haven’t been able to roll it out to anywhere outside the USA.  Yahoo doesn’t even do geo targetting on YPN.   Yahoo just added geotargetting to their search results this year and you can bet it will be years before they add more basic functionality.

This acquisition effectively gives Google at least 2 to 3 years lead in development time and in those years google will be able to offer sites far more revenues then yahoo or microsoft ever could.   Yahoo and microsoft don’t have the teams in place to effectively replicate this stuff.   Once yahoo and microsoft come out with something google will effectively control the advertising ecosystem.

Google, yahoo and microsoft will eventually offer advertisers the ability to target users based on their demographics and display branded ads to them on the content distribution networks.  

31 Responses to “Google buys doubleclick and KO’s Yahoo and Microsoft.”

  1. Marc Says:

    I think this illustrates the differences between Google and Yahoo. While Y! monkeys around with Web 2.0 science projects and flirts with social network aquistions, Google focuses on making big cash with an eye to the bottom line. Y! seems to look at revenue models as something hazy over the horizon that they’ll worry about later. The sad thing is Y! wasn’t in much of a financial position to even digest a $3.1 BB aquisition. I think it was really out of their league. As time goes on more and more doors seem to close on Y!. Also Microsoft is just stodgy. They haven’t produced any new significant revenue streams in a decade. They upgrade and milk the ones they’ve got, but those are all becoming a smaller part of the information economy. By the way, I think you make a very insightful analysis. I’m inclined to agree.

  2. Jonathan Frate Says:

    Also Microsoft is just stodgy. They haven’t produced any new significant revenue streams in a decade.

    Dude – anything microsoft touches does a minimum of 100 million bucks a year. microsoft sneezes and pumps out 100 plentyoffish’s a year. The past decade has seen microsoft roll out things from MSN, to the servers that plentyoffish runs on to the xbox and that entire ecosystem around it.

    Credit where it’s due!!!

  3. Marc Says:

    $100 million is a drop in the bucket for a company with a $280 BILLION MARKET CAP. Please put things in perspective. If they want to keep those shareholders happy. They need MULTI-BILLION DOLLAR ideas in the pipeline. They live off the laurels of Office and Windows. Anything less than that and they will continue to destroy shareholder value. They have a lower market cap today than they did seven years ago. They should’ve been well recovered from the bust by now. One plus. I hear Vista is doing better than expected. But operating systems are a much smaller part of the info-economy today. The same as railroads are a small part of the transportation economy compared to the 19th century. I think Microsoft is akin to a railroad. Slowly becoming less relevent. Slowly fading awaaaay~~~

  4. Mayo Says:

    The faster the 1Gbit/s broadband connection will put OS on the sidewalks, thought not completely it will push thin clients to the corporations that will have cheap 300$US Linux boxes and a thin client OS for all the needs.
    (http://eyeos.org/)

    It is just like the future electric cars(http://www.youtube.com/watch?v=J2DGfisAndI) that are only experimental but pushing forward pretty fast.

  5. mike Says:

    I wonder if you measured the goodwill value in the deal how high it would be. What are those relationships worth?

  6. Scott Says:

    Doubleclick revenues are around 300 mil a year. What… 10 years before they make that back up? Who knows where the internet will be at that time.

  7. Chris Says:

    Frequency capping is not exactly rocket science. I don’t think they paid 3.1 billion dollars to learn how to do it.

  8. Graham Martin Says:

    Chris, If you know how to code it, maybe you should offer your services to Yahoo, and see what they have to offer! You never know, you could retire in a few months…

  9. Markus Says:

    Its taken yahoo 10 years how to figure out geotargetting… And frequency targetting is just as easy.

  10. Chris Says:

    Already wrote it once for the adserver currently in use at our company. As a mid sized publisher, most advertisers and reps expect you to be able to daily frequency cap. Alot of them also expect that you can target geographically based on IP.

    Google most likely bought them because there are publishers who still run ads other than adsence due to the rates Google pays for bulk pages. Publishers either have a choice of building out their own salesforce or outsourcing a lot of the work and taking what DoubleClick will give them for their inventory. Google would like to have that market too. I could be wrong, just my take. Most of what they do makes me wonder.

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  12. love Says:

    Yahoo is a more stable company and will come out on top again after some years. Just watch.

  13. Marc Says:

    Yeah Yahoo is really stable. Earnings came out this week. Down 11%. GOOG earnings also came out up 59%. As far as I can tell they have been in a stable decline for some time now.

  14. Russian Says:

    Funny to read all this a year later, when MSN failed to buy yahoo and lost the battle to google

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