An acquisition by Microsoft, AOL or Google may be a possibility, but could put DoubleClick in hot water with its publisher clients, draining the company of prized user data.
The stale world of online ad serving just got interesting again, as a possible acquisition of ad management firm DoubleClick was floated yesterday. According to the Wall Street Journal, Microsoft or another buyer may grab the ad serving colossus soon. If a deal with Microsoft does become reality, it would boost the firm's online ad capabilities and make for readymade relationships with advertisers and agencies. However, it could put DoubleClick in hot water with its publisher clients, including AOL, which would be loathe to let the company access user data flowing through DoubleClick's DART ad serving system, and which compete directly with Microsoft's MSN for ad dollars. Indeed, AOL could be a potential buyer, some believe.
"It could mean a lot of things," said Forrester Research Senior Analyst Shar VanBoskirk, "like potentially AOL is going to consider buying DoubleClick, or AOL leaves DoubleClick." DoubleClick extended its ad management partnership with AOL in April 2005, scoring business across all AOL Media Networks properties including AOL.com, AOL Instant Messenger, Mapquest, Moviefone and CNN. AOL did not respond to a call from ClickZ News for this story.
DoubleClick would not comment on the Wall Street Journal report, a spokesperson for DoubleClick said, adding "They believe it's speculation and rumor." Investment bank Morgan Stanley is working with DoubleClick to explore strategic alternatives, according to someone familiar with the situation. While the prospect of an acquisition by a large online publisher like Microsoft appears likely, a DoubleClick IPO may not be.
Since purchasing the company in July 2005, private equity firm Hellman & Friedman trimmed DoubleClick of its e-mail marketing management business, toning the company into a leaner online ad-focused outfit. The company has since homed in on its ad management offerings and its rich media products developed through a relationship with Flash maker Macromedia. It also squelched competition from European ad serving rival Falk by buying it about a year ago.
"The end goal of Hellman & Friedman was to clean up the pieces and make some money off of [DoubleClick]," said VanBoskirk. "If there's a concern with Microsoft potentially competing with [DoubleClick's publisher clients], that's a Microsoft concern to figure out before they buy the company," she continued.
Under a large online ad seller such as AOL, Google, Microsoft or, perhaps less likely, Yahoo, not only might DoubleClick end up competing with current publisher clients for advertisers; those publishers could be threatened by potential access on the part of the new parent to the data gleaned from their sites for ad serving by DoubleClick.
"DoubleClick has cookie data on everyone, everywhere," said Tim Vanderhook, CEO of ad network Specific Media. He believes the main appeal for any new DoubleClick owner is the data it can tap into.
"The bigger publishers are very sensitive when it comes to their data," said Nils Winkler, managing director of AdTech, a European ad management firm that's recently entered the U.S. market and is aiming to go head to head against DoubleClick for publisher clients.
Because of the potential conflict over data, Winkler is pleased at the prospect of wooing publishers away from DoubleClick if a large ad seller snaps it up. "It might cause a number of customers to reconsider," Winkler said. "Microsoft would want to utilize that knowledge and let others benefit as little as possible," he added.
Forrester's VanBoskirk isn't so sure data is the draw. Instead, she thinks an acquisition by Microsoft would allow for "one more set of tools for them to create a holistic capability in the online space." Indeed, the online ad market is at the point where big online ad sellers are moving at breakneck pace to be the end all be all for advertisers, even beyond the Web.
The threat of total domination by Google could be enough for a competitor to eye a DoubleClick buy. "Google has an ad server, and I think they will continue to build more capabilities about where can use that," said VanBoskirk. "A lot of Microsoft's decisions have to do with what Google's doing and what they can do first."
In order for Google to truly be a force to be reckoned with when it comes to selling to big brand advertisers, however, the firm must allow advertisers and agencies to deliver and track ads using third party management firms like DoubleClick and competitors, aQuantive's Atlas and ValueClick's Mediaplex. This has some speculating Google could also be interested in a DoubleClick grab.
Either way, if the company is sold, many agree the time is right. "The timing is great for this sale," said VanBoskirk, noting the bright outlook and steady growth for the online advertising market. Hellman & Friedman reportedly wants $2 billion for DoubleClick. That would nearly double what the equity firm paid for it two years ago, even before selling off its e-mail business for around $90 million.
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Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.
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