April 14th, 2007

Google Acquired DoubleClick To Create A People-Driven Advertising Platform

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I sat in on a presentation by a Google rep to a New York agency — it was a big, wet sloppy kiss. Here was Google, king of impersonal, self-serve online ad efficiency up to its eyeballs in gooey “relationship building.” It’s no accident that Google’s New York office has more humans than servers.

This is the main reason why Google acquired DoubleClick — relationships. From the Official Google Blog post:

To that end, we are truly excited to announce our acquisition of DoubleClick. DoubleClick provides a suite of products that enables agencies, advertisers, and publishers to work efficiently, that will enable Google to extend our ad network and develop deeper relationships with our partners.

Google has realized that it cannot growth solely through the value proposition of hyper-efficiency, because most of the ad dollars are still controlled by companies focused on “branding,” which is far from hyper-efficient, to say the least. As Fred Wilson points out:

But, banners carry branding value that text ads don’t. The return on investment measure is not as cold and hard with banners. And the big branded advertisers that are leaving TV and print in search of better performance on the internet want to be able to brand with their ads. And they want to control where those ads are run. They’ll pay more for those two features.

In other words, brand advertisers will pay more not to be raked over the coals of hard ROI. And this isn’t necessarily a bad thing — while a lot advertising is probably still wasted, a media and marketing world driven entirely by Google’s hyper-efficiency would not necessarily be an attractive place.

Ultimately, Google knows that control advertising means controlling the fuzzy middle between branding and direct response:

Fuzzy Middle

Ads served by DoubleClick exist in the fuzzy middle, and those ads are still bought and sold more via connections between people than they are via connections between machines.

The Google rep I heard present towed the party line about Google not wanting to be an ad agency — and that’s probably right. Instead, Google is creating a people-driven platform centered on their huge regional offices and DoubleClick’s advertiser and publisher relationships.

People aren’t nearly as efficient as machines, but that doesn’t mean they can’t be programmed to feed Google’s money making machine.

  • It still remains to be seen if the Double Click deal will be approved by Congress but it does seem as though they are going to let it go through. Score another one for Google.

  • Scott,
    Did you purposefully invert the pyramid, so direct response (Google) wouldn't be at the top?
    Max

  • Don't let Google Fool you. They would aquire any advertising agency with a bunch of clients. Make the pie bigger so to speak. Google wants to dominate advertising like Microsoft does the OS. Not many people understand this yet, but once Google does have a Monopoly on advertising on the Internet, they can then truly make the OS less important.

  • Ben Landy

    Great post. With this acquisition, isn't Google betting that it can make online branding less people-driven? In other words, the squeeze is on for the fuzzy middle.
    If Google does not see a strategy to bring direct response-like efficiency to branding, then one would have to conclude that this acquisition is defensive. The question for Google is: will it take as long to figure out this riddle as it has to figure out online video distribution after the YouTube acquisition?

  • Ben

    Double click will implement a trading market for digital ad space (maybe similar to ebay). It's only a matter of time before they start trading ad space futures (maybe similar to nasdaq). I expect that Google has its eye on the untold billions to be had from owning the market that houses ad space speculation. They may have to jump through hoops for the SEC, but if they're pretty much the only game in town, they may get a charter: the money to be made would be staggering. If you combine that with the revenue they get for Adwords, they could end up "doing advertising to support their computing habit."

    It would make media buying a lot easier, though. Price and value would have a more direct relationship than they do now.

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