Google’s growth-by-acquisition not a long-term concern, say marketers

The proposed US$3.1-billion wedding of Google Inc. and DoubleClick Inc. announced in April will undoubtedly create a new force in online advertising. But before the deal is sealed, many industry stakeholders are speaking up now rather than forever holding their peace."Is it anti-trust? Hard to say. Will they continue to grow? Absolutely," says Brady Gilchrist, executive VP, strategy, at Fuel Industries, an Ottawa-based branded entertainment and digital advertising firm.The combined clout of Google, which dominates the search engine marketing field through its AdWords offering, and DoubleClick, which operates a display advertising network that boasts many of the largest Web publishers as clients, worries some in the Internet industry. Indeed, it caused the US Federal Trade Commission to launch a preliminary anti-trust investigation of Google's growing might on May 28.But it's potentially much bigger than that. Gilchrist points to Google's deal with Comcast, as well as its radio and newspaper advertising plays. "We're not just talking online advertising here - that's the interesting thing," he says. "It should be all advertising that's nervous."Peter Vaz, VP and GM at Toronto-based media management firm M2 Universal Online, agrees that Google is increasingly a force to reckon with in advertising on all platforms. "Like any business that wants to diversify and increase its points of presence in terms of advertising....I think they've just moved to the next logical step, which was making sure that they were covering the whole communications spectrum, including print and TV and radio," he says.Online is still Google's bread and butter, however: according to an average of figures from comScore Media Metrix, Nielsen NetRatings Inc. and Hitwise Pty. Ltd., the company held roughly 56% of the Internet search market in February.While Gilchrist is sceptical of the power to monopolize the market, he does have some reservations about the deal."I'd be more concerned about the fact that they know so much about us - what are they doing with that knowledge of us as individuals?" says Gilchrist. "The privacy issues the ability to sell intimate knowledge about our patterns and the things that we look for when we're shopping and the types of information that we like to consume and the news we read, the social networks we participate in...all that kind of stuff."Like Gilchrist, Vaz says the consumer privacy angle is the one stumbling block, both for regulators and in the court of public opinion. He notes that in 2000, DoubleClick raised privacy fears with an acquisition of its own, the US$1.7-billion acquisition of Abacus Direct.However, Vaz says he believes Google's desire to be a good corporate citizen will temper any temptation it might feel to make undue use of such data. "Knowing Google and having worked with them for a number of years, I'm not that concerned," he says. "I'm sure they'll use it wisely, because they've worked on a bunch of other initiatives with them where they had been dealing with very sensitive information which they have managed pretty well, without violating any privacy laws."And the merger will definitely help companies like M2 Universal Online present a clearer picture of campaign metrics to clients. "Having ad serving through DoubleClick integrated with search, I think, will be an upside, because it will give you a comprehensive picture," says Vaz, adding that right now his firm turns to several tools to quantify success on these different systems. "I think it will make it far more seamless, make it a lot more effective in terms of us optimizing our campaigns," he concludes.But Vaz and Gilchrist aren't the only ones raising questions about the uses Google and DoubleClick together might find for Web surfers' personal information. South of the border, on June 7 the Electronic Privacy Information Center, the Center for Digital Democracy and the Public Interest Research Group amended an earlier objection filed with the FTC over the privacy aspects of the merger.Some of the new conditions the groups requested be put on the deal included an opt-in policy for personal data collection - including the right for users to know what data had already been collected about them - the maintenance of separate databases by each company, and a prohibition on behavioral tracking.Others also voiced concerns about the effects the merger would have on competition in online advertising after the deal was announced, most notably Microsoft Corp. and Yahoo Inc. However, their objections have been tempered by some deal-making of their own: Yahoo announced its US$680-million plans to acquire online advertising exchange Right Media at the end of April, while Microsoft made a US$6-billion offer for aQuantive last month.Not to be deterred, Google announced another acquisition on June 1, that of Chicago-based Web publishing and content syndication firm Feedburner Inc.But while Google may be ascendant today, Gilchrist points out that many Internet companies have come and gone, falling from high-flying Icaruses to, in some cases, bankruptcy. That could mitigate the long-term effects the search engine firm has on competition online. "Without appearing too sci-fi, the truth is that somebody could invent the technology tomorrow that changes the whole game, because we're only so far into this," he says.

Google’s growth-by-acquisition not a long-term concern, say marketers

Broadcast | June 18, 2007

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