Google-DoubleClick: The next phase

Now that Google has acquired DoubleClick--the display advertising feather in its proverbial cap--it's time to see if the hat fits.

The $3.1 billion acquisition, which finally closed last week upon European regulator approval, gives Google a much needed boost in the market for display advertising.

Google hasn't offered many clues as to what its plans are with DoubleClick, other than to hint at layoffs. But Google pundits and executives at small ad outfits do have concerns and plenty of opinions about what the search king should do.

Google's AdSense serves up pay-per-click text ads to Web sites within its publisher network, while DoubleClick, which markets a product called Dart, places banner ads on Web sites. DoubleClick also runs an advertising exchange and a search-engine marketing business called Performics.

There are some basic conflict-of-interest questions with some of the additions to Google. As the largest search engine, Google has kept its distance from search engine optimization, or SEO, which is the science of increasing a Web page's rankings in search results. But with Performics, Google owns an SEO company.

"Even if Performics is kept completely separate from the Google search team, there's the impression that Performics might have some special 'in' with Google's non-paid search results," writes Danny Sullivan in a Search Engine Land blog post in which he urges Google to get rid of Performics.

Granted, Microsoft finds itself in the same SEO-owning boat after acquiring Avenue A/Razorfish and Sullivan poses this question to both companies: "You own the pie; do you really need to sell the pie cutters too?"

There's another conflict Google bumps up against with DoubleClick--the fact that it risks alienating publishers who don't want Google to have too much control. Google could integrate DoubleClick's Dart ad management and serving technology into AdWords to offer one unified dashboard and see into even more Web sites across the Internet.

"A lot of DoubleClick's customers consider Google a competitor," says Frank Addante, chief executive of The Rubicon Project, which offers a dashboard for sites to manage the more than 300 online ad networks. (Addante was formerly with L90/adMonitor advertising platform, which was bought by DoubleClick in 2001.)

"Now, if Google owns all the technology they have access to that data, they know what's being bought and sold," Addante says. "It puts customers in a tough situation."

The merger "cements Google's position as 'frienemy' with major publishers," says Jim Barnett, chief executive of Turn, an automated online ad market.

And there's the question of whether Google will continue to restrict its customers from working with third-party ad servers. "Advertisers working with Google couldn't use third-party ad serving, so a lot of people wouldn't use Google," says Michael Cassidy, chief executive of online ad network Undertone Networks.

"Our clients on DoubleClick that have contracts expiring with DoubleClick are saying it's a dead end," that it will be eclipsed by Google technology, which will impact customers, said Ruben Buell, chief executive of AdShuffle, an ad serving company.

Google also has to figure out what the best business model is for ad serving. DoubleClick charges customers for it, but Google is testing a free ad management service called Ad Manager.

Beyond the technical integration issues, the two merged companies face a culture clash. It's "Madison Avenue hipsters" meets "Silicon Valley geek types," according to Addante.

"Display is more brand advertising, more emotional," he says. "I think it's going to take Google some time to learn that side of the business because they're so data driven."