Google Don't Be Evil - Danny Sullivan

Danny Sullivan has a great post on the conflict of interest facing Google with the consummation of DoubleClick. DoubleClick is online behavioral target ad network. DoubleClick also owns Performics, one of the largest paid inclusion and pay for performance providers. Danny points out that by owning Performics, Google is essentially competing with is customers - in this case SEO and SEM specialists. Even the perception of such can be dangerous to Google's search and advertising business as it erodes the trust of the professional services industry that has built Google's revenue base.

Google has been shopping Performics since May 2007 - DoubleClick Performics Shopping according to sources. A very high level source also told me that last year Google and Performics transacted upwards on US$70 million in revenue. So losing Performics would have an impact on Google's share price (GOOG) which is enjoying a fat multiple. Further, only an entity with deep pockets can afford the money to take Performics off Google's hands. I contacted four (4) CEOs of advertising companies and none of them are in discussions with Google about Performics. So who would Google be shopping Performics to? I don't have a clue. Send me your thoughts.

European Union approves Google's acquisition of Doubleclick

The EU has approved Google's acquisition of display advertising giant Doubleclick in a move that will enlarge Google's already huge advertising footprint. Google CEO Eric Schmidt notes at the Google blog:

DoubleClick gives Google the leading platform for display advertising, enabling us to rapidly bring advances to the market in technology and infrastructure that will dramatically improve the effectiveness, measurability and performance of digital media for publishers, advertisers and agencies.

Schmidt also alludes to the probability of layoffs from current DoubleClick staff saying "there may be reductions in headcount", mostly in the USA. Presumably Google would be laying off DoubleClick rather than Google employees though that was not stated in the note.

Historically, online display advertising has arguably been far less effective than pay per click, although format changes and better reporting and tracking systems seem to have improved the prospects of the display ad - now a far cry from simple banner advertising sold at relatively high cost per thousand. These dominated internet publishing several years ago and often left advertisers unhappy with the performance of the campaigns.

A key issue with this acquisition will be the degree to which Google can leverage the Doubleclick display advertising empire to enhance Google's overall dominance in the advertising space.

EU Press Release
Google's Statement