Google's Deal For DoubleClick Could Be The End Of Yahoo - InformationWeek

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4/17/2007
02:38 PM
Stephen Wellman
Stephen Wellman
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Google's Deal For DoubleClick Could Be The End Of Yahoo

Unless you live in a cave (not that there is anything wrong with that), you probably know by now that late last week Google agreed to buy online ad services company DoubleClick for $3.1 billion. Google paid through the nose for DoubleClick -- roughly 10 times revenue. Everyone has been talking about how this deal kept Microsoft from owning the display ad space. While I t

Unless you live in a cave (not that there is anything wrong with that), you probably know by now that late last week Google agreed to buy online ad services company DoubleClick for $3.1 billion. Google paid through the nose for DoubleClick -- roughly 10 times revenue. Everyone has been talking about how this deal kept Microsoft from owning the display ad space. While I think that was one of the reasons Google executed this deal, there is a bigger one. Combined with AdWords, DoubleClick could give Google the ammunition it needs to kill Yahoo.If Google had any one weakness when it came to fighting Yahoo, it was display advertising. Not anymore. This deal gives Google a straight shot into the world of online branding. Google has been working for the last several years to build relationships with Madison Avenue. Now Google can use DoubleClick to enhance these relationships.

Even more important, Google can combine its AdWords and contextual advertising technologies with DoubleClick's platform and backlog of data to deliver the most comprehensive, contextual, and behaviorally driven online ad solution on the market.

I think one of the big reasons Google agreed to this deal is the recent success of Yahoo's Panama ad platform. According to recent reports, it looks like Yahoo may report significant growth in online ad sales in the first quarter, thanks in large part to Panama:

Yahoo, the owner of the most-visited U.S. Web site, today may say sales rose 11% in the first quarter, which included two months of Panama ads. Sales probably reached $1.21 billion, according to the average estimate of 26 analysts surveyed by Bloomberg. Net income may have been little changed at $158.7 million, or 11 cents a share.

Now that Google has DoubleClick, I don't see Panama's advantages lasting more than six months, tops. By that time, Google should have integrated DoubleClick's technology and data into its ad systems.

What do you think? Will DoubleClick give Google the ability to drive Yahoo out of business?

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