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Google buys Doubleclick
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| LeopoldStotch |
story here
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DoubleClick, the New York-based Internet advertising network, is no YouTube: It is an unsexy, revenue-producing business run by grown-ups who keep a low profile. It is also worth much more: Google announced Friday it was buying DoubleClick for $3.1 billion in cash, making it the company's most expensive acquisition.
Now that DoubleClick is off the table, will the purchase boost the fortunes of DoubleClick's competitors? Many of the YouTube also-rans thought the larger site's purchase would increase their value in the eyes of potential acquirers. That hasn't panned out.
But "DoubleClick has set a benchmark," says Gurbaksh Chahal, co-founder and CEO of the privately owned Blue Lithium, which helps advertisers manage their online campaigns. "It validates our need in the marketplace."
Founded way back in the heyday of the first Web boom, DoubleClick is an 11-year-old company whose fortunes have risen and fallen along with the Internet ad market. The company brokers online ad sales for a large network of buyers and sellers, and as the Web has hit its stride as a marketing vehicle, DoubleClick has become increasingly valuable. In addition to Google (nasdaq: GOOG - news - people ), the company had attracted interest from Microsoft (nasdaq: MSFT - news - people ), Time Warner (nyse: TWX - news - people ) and Yahoo! (nasdaq: YHOO - news - people ).
But those companies still have plenty of other acquisition options. One potential candidate is ValueClick (nasdaq: VCLK - news - people ), a publicly traded online marketing company that provides demographically targeted ad space to about 6,000 advertisers and advertising agencies. ValueClick generated $382 million in revenue; it sports a market cap of $2.77 billion.
Gary Fuges, an investor relations spokesman for ValueClick, refuses to comment on a possible future acquisition. But he downplays similarities between his company and DoubleClick.
"The names sound the same, but the sweet spot of what we do is very different from the sweet spot of what they do," Fuges says. He argues that DoubleClick's values stem from proprietary software that allows publishers and advertisers to manage and track their online advertising. ValueClick offers a similar program, called Mediaplex, for serving and tracking ads, but Fuges says the software accounts for less than 10% of the company's revenue.
Another purchase option is Right Media, an online ad network that has hosted since 2003 an open ad exchange similar to DoubleClick's offering. That eBay (nasdaq: EBAY - news - people )-like ad marketplace has since fostered connections between 11,000 advertisers and publishers and attracted the attention of Yahoo!, which bought a 20% stake in the private company.
Right Media Chief Executive Michael Walrath says Yahoo!'s equity position wouldn't hold up any potential sale; he notes that Yahoo! doesn't have right of first refusal on any transaction. But he says the company is potentially worth more as an independent broker instead of working as an arm of an online media giant.
"If we were acquired, we'd have to preserve what makes us unique. We won't allow it to become a tool that creates captivity to a single company," Walrath says. "That would run counter to everything we've worked for."
In theory, Walrath's concerns should also apply to any online ad network--if a major player acquires it, that could scare off participation from its rivals. Still, some of DoubleClick's competitors are optimistic about reproducing the company's outsized price tag The company is reported to have generated $150 million in revenue last year; the $3.1 billion price tag means Google valued it at more than 20 times revenue. That's about triple the values typical of the industry's market caps.
Jonathan Hsu, chief financial officer and chief operating officer of publicly traded ad management company 24/7 Real Media (nasdaq: TFSM - news - people ), is confident his slice of the ad industry will only grow as dollars hemorrhage out of the traditional advertising industry. He says future buyouts will still be buoyed by a lack of options.
"There's a scarcity of companies in our sector that have scale, good technology and experienced management and personnel," Hsu said last week, naming his own $428.77 million market cap company along with ValueClick and the online advertising manager aQuantive (nasdaq: AQNT - news - people ), whose market cap is $2.23 billion.
"The bidding on DoubleClick just represents a price floor," he says. "Any future acquisitions will be at that premium."
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wow. that's all i have to say. |
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| Frenchie |
Interesting. The name "google" has so much power behind it that I think it's likely to own a lot of media based corporation in the future.
I wonder if companies would feel more secure if they were owned or backed up by the name "Google" |
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| Ivand |
I also love their "double life", i dare to say that at least 70% of people that know google know it as a "search company" while it has always been an advertiser.
If you check google vision and mision, you dont have search anywhere, they are THAT global. being known as a search company instead of an advertiser while being one helps the company retain the trust that has from consumers, then the consumers "us" (me included, proudly) give up our data more easier, which is every advertiser dream.
If you have seen the Googlezon mockumentary you'll know what i mean, tho is pretty far fetched it not that mad as it looks
Also, now you cant double click any icon in your computer without paying for royalties to google |
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| Swamper |
Interesting...
Doubleclick is a big player, mainly dealing with the top web properties online in terms of traffic... It has always been the hardest one to get hooked up with, even true 8 years ago or so...
I think Valueclick is pretty safe -- though I wish they never bought up Fastclick, which IMO was the best ad company to work with. |
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| Ivand |
| quote: | Originally posted by Swamper
Interesting...
Doubleclick is a big player, mainly dealing with the top web properties online in terms of traffic... It has always been the hardest one to get hooked up with, even true 8 years ago or so...
I think Valueclick is pretty safe -- though I wish they never bought up Fastclick, which IMO was the best ad company to work with. |
Google is simply paving their way into corporate america, which is what they should do with they being the new kids on the block |
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| igottaknow |
| Lets just hope Microsoft doesn't buy google :nervous: |
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| Ivand |
| quote: | Originally posted by igottaknow
Lets just hope Microsoft doesn't buy google :nervous: |
I really really hope so, but with the power those kiddos know the have on their hands, i dont really think they'll sell. |
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| Marc Summers |
| i always get doubleclick tracker cookies |
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| Ivand |
| quote: | Originally posted by Marc Summers
i always get doubleclick tracker cookies |
its all those porn sites |
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| Marc Summers |
| quote: | Originally posted by Ivand
its all those porn sites |
I only go to one, brah. |
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| igottaknow |
| quote: | Originally posted by Marc Summers
I only go to one, and then spend the whole day there brah. |
fixed |
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| LeopoldStotch |
| yeah everyone knows google is the #1 search engine, but i don't think many people know that google is trying to become the #1 web ad engine. i wouldn't be surprised at the end of this year, or next year, people start making claims google is starting to become corporate like microsoft, and care more about money than quality. imo, i think google is trying hard to become a global web engine, like microsoft is trying hard to become the best OS for all computers. |
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