July 27th, 2007 | Published in Google Public Policy
It’s been a little over three months since Google announced our plans to acquire DoubleClick. We’ve blogged about our reasons for making the acquisition, and the deal has certainly made news. But less attention has been paid to what's been happening in the broader online advertising world since the deal was first announced: namely, a series of almost back-to-back acquisitions that demonstrates how many choices advertisers, website publishers, and consumers really have. Consider that after we announced the DoubleClick acquisition on April 13:
- On April 30, Yahoo announced its intent to acquire Right Media, an online advertising exchange, for $680 million.
- On May 16, AOL announced its plans to acquire ADTECH AG, an online ad-serving company, for an undisclosed amount.
- On May 17, WPP Group announced its planned acquisition of online advertising company 24/7 Real Media for $649 million.
- On May 18, Microsoft announced its planned acquisition of aQuantive, an online advertising firm, for $6 billion.
And just this week, two more announcements highlighted the tremendous activity in this space:
- On July 24, AOL announced its acquisition of TACODA, an online behavioral targeting advertising network, for an undisclosed amount.
- Finally, yesterday Microsoft announced that it has agreed to acquire online advertising exchange AdECN Inc. for an undisclosed amount.
What does all this mean? It means that each of the leading Internet companies believe that they can position themselves to succeed in the online advertising space -- through the free market, and without government intervention. These companies believe that there are many ways to compete in this business.
Google, Microsoft, AOL, Yahoo, and others are developing different combinations of capabilities in an effort to provide the most compelling offering to advertisers, publishers, and customers. For example, Microsoft’s purchase of aQuantive will eventually result in it owning an ad serving business that competes with DoubleClick, and will also make Microsoft one of the largest interactive advertising agencies in the U.S. In DoubleClick, Google is acquiring a technology that delivers and measures the performance of display ads – a technology that is critical if we are to compete in display advertising.
Beyond the different approaches that companies are taking, more capital infusion into the online ad business also means that more entrepreneurs will enter it, too. In fact, we have noticed that several startups in the online advertising space have received venture funding since April. More entrepreneurs, more market participants, and more capital are combining to create more competition and innovation.
Brian McAndrews, the President and CEO of aQuantive (which, as noted above, has been purchased by Microsoft) recently said about online advertising: "We're in the first or second inning of a long game here. There's no monopoly on innovation. I don't think you're going to see two or three big players and then game over. There will continue to be a broad range of companies." We couldn’t agree more.
In fact, we think that these acquisitions signal a new phase in online advertising, in which barriers between technology providers and advertising agencies are beginning to fall. These market dynamics will ultimately benefit consumers who will see more relevant and useful ads, and provide advertisers and publishers with more choices. And these are exactly the kind of competitive and innovation-driven market conditions that policy makers should be encouraging in our economy.