Media Forum: Is the DoubleClick deal wise?

Will Google's takeover be good news for advertisers, Ian Darby asks.

It has taken almost a year, but now Google's takeover of the online ad serving company DoubleClick can proceed. Last week, the European competition authorities (like the US Federal Trade Commission before them) ruled that the deal could go ahead after investigating its implications on anti-trust grounds.

Rivals such as Microsoft had cried foul over the deal almost from day one, arguing that it raised privacy as well as competition issues.

The European Commission, however, considered the takeover solely on anti-trust grounds and ruled that it would have no harmful effect on consumers "either in ad serving or in intermediation in online advertising markets" and that the merged business would not be able to "engage in strategies aimed at marginalising Google's competition".

But should the deal be of concern to advertisers? Some may worry that Google's power in the search market (where it controls around 62 per cent of global spend) coupled with this move into display advertising makes it too dominant. The EC says this isn't the case as advertisers have access to other alternatives in the display market in Microsoft, Yahoo! and AOL.

Some in the UK aren't convinced by the argument, arguing that the deal is a step too far. Andrew Walmsley, the founder of i-level, says: "Google has a near monopoly in UK, France and Germany, and this ruling allows it to build further on that platform.

"Advertisers are concerned that the acquisition will hinder competition in the media market, but they're also concerned that Google has fingers in too many pies - selling media on behalf of publishers, distributing search on those publishers' sites, and, particularly, tracking performance of advertising on advertisers' own sites."

Others aren't so sure that Google's "pantomime villain" status is deserved. Marco Bertozzi, the head of digital at ZenithOptimedia, says that the deal will have some benefits to advertisers in terms of investment in technology and research.

"Google and DoubleClick will gain a better understanding of the customer journey and a greater understanding of behavioural targeting and the best thing that they can do is feed this back to agencies and advertisers. It could be especially beneficial for big advertisers that it's investing in technology."

Bertozzi concedes that privacy issues may arise given Google's access to such large amounts of customer data. But he concludes: "From a consumer perspective, they are already giving away more data to Google than they could ever imagine, but this data is protected and Google doesn't use it to identify people as individuals."

On a pure advertising environment level the deal will bring benefits, Amy Lennox, a founding partner of Trinity Communications, says, because it will enable Google to offer upgraded file sizes and richer media. But she argues that Google will still lag behind Yahoo! and MSN in having a strong display network, as DoubleClick is essentially about ad serving data rather than a true network offering ad inventory. She adds: "It's no wonder Microsoft is feeling uncomfortable, though, as it has all the components - search, display network and ad serving, but consumers just aren't using its search facility. In real terms, Google has a significantly lesser display network, but now has great ad serving through DoubleClick and stonking search from a brand people love."

Kieron Matthews, the head of marketing at the Internet Advertising Bureau, thinks Google's apparent dominance should be seen within the context of an online ad market that has grown to become a £3 billion industry in the UK and that some consolidation in a hitherto immature market is a good thing. He says: "There is an argument that this is good for advertisers in that it will bring a lot together under one roof. The benefits are likely to be a seamless trading system with search and ad traffic all measured under one roof - providing advertisers with one piece of research from one point."

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NO - Andrew Walmsley, founder, i-level

"Google already makes more money in the UK than ITV and Channel 4 combined - I suspect the regulators don't fully appreciate the scale and implications of such a deal as online grows."

YES - Marco Bertozzi, head of digital, Zenith-Optimedia

"There will be benefits for big advertisers as it's about making media in this space more efficient and investment in technology will bring big improvements in ROI and delivery for clients."

YES - Amy Lennox, founding partner, Trinity Commun-ications

"The low-cost, targeted inventory on the Google content network can be upgraded to deliver rich media. Google's network can deliver low-cost online environments to challenge the bigger sites."

MAYBE - Kieron Matthews, head of marketing, Internet Advertising Bureau

"Right now it's easy to say that Google has cornered the market, but something can come along and within ten minutes change everything. This might have raised alarm bells among rivals, but should provide for improvements in advertising best practice."