With Google's main revenue coming from advertising, they made a strategic move of purchasing DoubleClick Inc this week for $3.1 billion(The Wall Street Journal).Having 2/3 of the market share of the search advertising market, this makes Google the leader in online search advertising. With the acquisition of DoubleClick Inc, Google will now also have a take on banner displaying ads which were previously not offered in Googles advertising services.DoubleClick Inc having big names like Friendster and MTV as their customers would bring Google's advertising services to another level as Google's adwords were previously targeted to smaller businesses with text ads.
"We are thrilled that our acquisition of DoubleClick has closed. With DoubleClick, Google now has the leading display ad platform, which will enable us to rapidly bring to market advances in technology and infrastructure that will dramatically improve the effectiveness, measurability and performance of digital media for publishers, advertisers and agencies, while improving the relevance of advertising for users."
Eric Schmidt, Google's Chairman and Chief Executive Officer
Google which is looking to expand its online ad offerings had chosen this strategy because of fears that the consumer slowdown could spill over into online ads which represents most of Google's revenues. $3.1 billion might not be a small amount but Google saw not only what the current company is able to provide now but its more of a future plan. What Google lacks in online marketing can be found on DoubleClick Inc which Google will make full use of in future. Complimenting each other with Google having money and brains and DoubleClick Inc having a vibrant advertising business for banners,video's and other forms of display ads will not only be targeted at generating immediate sales but also to promote brands in the long run.
With the acquisition of DoubleClick, Google launched another new service in their group of services. The new Ad Manager service that is offered is currently in the beta testing stage.This used to be a charged service offered by Doubleclick but is now offered free by Google. The service is currently by invites only and provides the adverts free of charge. With the free ad manager, it'll allow web site publishers to advertise faster and fill unsold slots on their sites.
The Ad Manager helps reduce problems with managing advertising on pages as it is capable of helping you in the decision of picking the highest paying site from your available advert inventory.The adverts are hosted on Google's servers and web publishers can access them through a web browser.The Ad manager is flexible enough to allow publishers to sell their own advertising and for ad space that they can't sell, they can opt to use Google's AdSense system to fill those unsold slots.This benefits both parties as the advertiser pays Google for the service and Google places these ads on the web publisher sites for free.In return, the web publishers earns from the clicks.
Having kept Microsoft away from buying DoubleClick Inc and launching Ad Manager is definitely a great strategy as it would have created more competition in the online advert between Google and Microsoft as Facebook which has more than 9 million registered user is already working with Microsoft to offer advertising to their users. Having lost Facebook to Microsoft, Google's winning bid this week for DoubleClick Inc is a great lost to Microsoft because if Microsoft were to also acquire DoubleClick, they would be having a strong grip on advertising on social network sites which are currently a big crowd puller on the Internet. Google's new Ad Manager service might not be working with a crowd puller like Facebook but they definitely have a new revenue model that can generate as much revenue or perhaps even way after the Facebook hype is over.
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