Google gains display ad dominance with DoubleClick deal

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With the purchase of DoubleClick Inc., Google Inc. will position itself as the No. 1 company in the online display advertising space. Couple that acquisition with its lead in search marketing and Google becomes the one-stop shop for most of your online advertising needs. An added bonus: it beats Microsoft to the punch yet again.

Google last Friday said it has signed a definitive agreement to acquire DoubleClick Inc., a global advertising technology and services company, for $3.1 billion in cash. The sellers are San Francisco-based private equity firm Hellman & Friedman and JMI Equity & Management, which will flip DoubleClick for almost three times as much as they paid for the New York company in 2005.

"With its DoubleClick purchase, Google extends its capabilities into online display advertising and completes its set of online services," said Shar VanBoskirk, senior analyst at Forrester Research Inc., Cambridge, MA "This deal gives Google access to publishers outside of its current AdSense network and to behavioral data that will help them with ad targeting.

"With the online space locked up, Google can focus on maturing its current offline efforts and on defining its next moves into traditional channels," she said.

If the deal goes through, it will combine DoubleClick's ad management technology for media buyers and sellers with Google's advertising platform and publisher monetization services.

Google will pay nearly double for DoubleClick as it did for YouTube, a $1.76 billion purchase concluded last year.

This deal keeps DoubleClick from the hands of Microsoft's MSN, which has been trying to place itself next to Google as an advertising rival.

Ms. VanBoskirk said the $3.1 billion paid for DoubleClick is "a worthy price for Google to pay to block MSN's bid and ensure it stands alone as the king in this space."

This deal will also strengthen the company's position next to Yahoo, its chief rival in Internet search and advertising.

"MSN and Yahoo focus on driving loyalty with their users and advertisers," Ms. VanBoskirk said. "Instead of constantly trying to out-Google Google, this deal will push Google far enough ahead that Yahoo and MSN will finally accept their second- and third- place positions and invest in retaining customers and providing value to existing advertisers."

The New York Times last week reported that the main reason for the deal was to set in motion Google's display advertising business and "marry it" with search advertising.

The DoubleClick-Google synergy will offer customers and consumers tools for targeting, serving and analyzing online ads of all types.

The companies claim that users will now have an improved experience on the Web since ads will be more relevant. They say online publishers will have access to new advertisers.

Agencies and advertisers also benefit since they will have an efficient way to manage both search and display ads in one place. They will be able to optimize their ad spending across different online media, too.

Both companies have approved the transaction. However, the deal is subject to the usual closing conditions. It is expected to close by the end of the year.

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