Google's Ad Reach May Be Unrivaled
Friday, December 21, 2007
The $3.1 billion merger between Web search king Google and online ad giant DoubleClick approved by U.S. regulators yesterday may create an advertising powerhouse of unrivaled reach and knowledge of Internet users' lives, desires and interests.
The acquisition of DoubleClick combined with Google's search function and the data it collects from people as they use the Internet could result in Web surfers seeing more advertising that corresponds to their online activities. The trade-off, some say, is that users would lose control over more of their private information to Google.
Given its global scope, the deal still requires approval by the European Union, which has been more strict than the United States on antitrust reviews. The ambitions of big U.S. companies such as Microsoft have been curbed by European regulators.
Privacy advocates and Google's rivals have shifted their lobbying to Europe, where Google has a larger share of the online-search market.
The deal is one of many big-money mergers between Internet companies and advertising firms this year and heralds the era of data-based advertising, as companies seek more ways to acquire data about what people are doing on the Internet and to deliver highly targeted advertising to them. The fear is that the collection of so much personal data by one firm could expose it to theft and abuse via the Web or even cellphones.
Google has excelled at "contextual advertising," or sending text-based ads to Google users that relate to their search topics. For example, if a user searches for a specific automobile, Google will send car ads with search results.
DoubleClick is the Internet's leading company for producing display advertising for Web sites -- banners ads, video and such. The company has provided display advertising for almost every major online publisher, including Web sites for Sports Illustrated, About.com and PriceGrabber.com.
Combined Google and DoubleClick technology could evolve so it delivers precisely targeted display and video advertising to the customers most likely to buy their advertisers' products.
Online is the fastest-growing sector in advertising, expanding at an annual rate of about 20 percent, far outpacing television, radio or outdoor. Because the Internet can tell advertisers a great deal about who sees their ads -- where they live, how much time they spend looking at the ad, which site they saw it on -- companies such as Google are buying companies with the most sophisticated tools to deliver ads to Internet users.
The deal was approved without conditions in a 4 to 1 vote yesterday by the Federal Trade Commission. The FTC said it does not think it is approving a Web advertising monopoly, though one commissioner and some others disagreed.
In a written statement, the commission said the merged companies would not control the user-data market, pointing out that Google's chief rivals -- Microsoft, Yahoo and Time Warner -- "have at their disposal valuable stores of data not available to Google."
In a statement on Google's corporate blog after the FTC vote, David C. Drummond, the company's general counsel, wrote: "Perhaps most importantly, the FTC's decision publicly affirms what we and numerous independent analysts have been saying for months: our acquisition does not threaten competition in what is a robust, innovative, and quickly evolving online advertising space."