The Wall Street journal has said that both Microsoft and Google are caught in a $2 billion plus bidding war to take over long term internet advertising specialist DoubleClick. This week DoubleClick, a survivor of the dotcom madness that brought the 90s to such a spectacular end, launched a marketplace product that will compete head on with Google’s advertising auctioning system.
DoubleClick, once high flying and public was taken private through a private equity group purchase during 2005. Today its has revenues of just $150 million, a shadow of its former self, and is owned by Hellman and Friedman. But it has also begun acquiring again and last month bought TangoZebra, a European rival that is strong in rich media including broadband video.
Virtually every advertising agency the world over is used to relying on the DoubleClick DART application that delivers advertising and reports back the number of impressions and clickthroughs from that advertising and as such it is the Nielsen Media of the internet world.
The move by DoubleClick to create an Advertising Exchange to connect buyers and sellers of online ads, puts it directly up against Google, and that’s something that probably makes the company more attractive to Microsoft than to Google. The Exchange is to help advertisers to market unsold advertising inventory for the best possible price. Around 25% of internet advertising is either left unsold or sold off as ‘remnants’ for virtually nothing. The marketplace is expected to go “live” in the third quarter and will be available globally by the end of 2007.
However Google has in the past shown that it is more creative is structuring acquisition deals and it may still land the prize.
Both Microsoft and Google seem to already have the capability for ad serving and reporting in their existing systems, so really they are buying the goodwill at advertising agencies more than anything else. Surely that’s hardly worth $2 billion.