How DoubleClick Could Boost Google

But clearly, the most immediate and ripe opportunity to reduce its dependence on PPC ads lies on the display ad market, and DoubleClick should have an immediate, direct effect on these efforts.

"DoubleClick makes Google a much more credible player in the display ad segment," said industry analyst Greg Sterling of Sterling Market Intelligence. "Google has had display advertising, but it has been a lesser part of the business. DoubleClick gives them more assets to diversify the ad spend and get more of brand advertisers' budgets."

DoubleClick provides products and services to let Web publishers, online advertisers and ad agencies manage their digital marketing efforts. Its Dart division provides tools and services to both buy and sell advertising, primarily display and rich media ads. The Performics division focuses on search engine marketing, commonly based on the pay-per-click ads in which Google specializes.

"With DoubleClick, Google has more to offer, like a search-and-display ad package that'd be more difficult to do without this acquisition. Google should become stronger and more balanced with respect to the display ad segment," Sterling said.

By the same token, if the integration goes well, Google's current advertising clients and publishing partners should benefit from the fusion of DoubleClick services and tools with Google's, resulting, conceivably, in a single display/search ad platform, single buying environment and single reporting structure, Sterling said.

Still, as Google motors ahead with its integration of DoubleClick, it must watch its step because it will remain under the watchful eye of privacy advocates in Europe and the U.S. These privacy groups have been vocal about their concerns that the DoubleClick acquisition could give Google too much power to track and profile people's online actions.

Marc Rotenberg, executive director of the Washington, D.C.-based Electronic Privacy Information Center (EPIC), said that although Europe's highly respected competition commission allowed the deal to go ahead, it made clear that its decision had no bearing on whether the deal is in line with European data protection laws.

"It's very important that DG Competition [Europe's Directorate General for Competition] made this distinction. Google is trying to gather support for an international data protection standard that falls far short of Europe's standards," he said.

Monique Goyens, director general of BEUC, a federation of European consumer groups, said she is "disappointed" with the merger ruling and expressed hope that the new Google/DoubleClick entity will rigorously follow European legislation.

"Moreover, given its position, Google has a duty to set an example to avoid a 'race to the bottom' of consumers' privacy rights on the web," she said in a statement.

The team of European Commission officials that conducted the merger review concluded that the combined company won't hurt competition because Google provides online advertising space on its own sites and, as operator of the AdSense service, serves as an intermediary between publishers and advertisers, while DoubleClick offers ad serving, management and reporting services to publishers, advertisers and agencies. In other words, they don't compete. The only thing a merger review considers is the proposed deal's impact on fair competition.

In a blog posting, Gartner analyst Andrew Frank stressed that Google and other Internet giants can't ignore privacy laws and concerns as they pursue online ad revenues.

Google and other online ad companies face the challenge to "pursue an aggressive agenda of more control and transparency around data collection practices while continuing to grow their businesses," Frank wrote.