Google and the Rebirth of Banner Ads

The DoubleClick deal cements Google's dominance of online advertising—and augurs a revival of the lowly but oddly effective display ad

by David C. Churbuck

I've been thinking a lot about Google's (GOOG) proposed $3.1 billion acquisition of DoubleClick and the implications for advertising. In fact, a lot of people have been reflecting on the deal, what with Microsoft (MSFT) and AT&T (T) crying foul, and Yahoo! (YHOO) reporting a first quarter that underscored exactly why it's trailing Google in online advertising. I've known DoubleClick since the mid-1990s, when I was editor of Forbes.com and the company acquired our first ad-server provider, NetGravity. In my days at tech researcher IDG, as I learned online ad ops—the art of placing ads on Web pages and reporting the results to the advertisers—I even used DoubleClick's primary product, Dart.

Ad servers—the tools that place ads on a page—are neither interesting nor fun to play with. Those who do use them usually hate them and trade tales of their quirks and bad behaviors like grizzled war veterans. Which explains why ad ops is the most thankless job in the interactive world, even though it's the one with the highest stakes. Screw up an ad campaign—say, by missing a date or placing the ad on the wrong pages—and you can kiss the advertiser goodbye.

Enter Google, which by cracking open the concept pioneered by Idealab founder Bill Gross of placing ads against search results, has become the de facto master of ad serving and targeting. Sure, Yahoo has Panama, Microsoft's MSN is getting it together, and lots of nimble little mammal vendors like Quigo are providing paid search capabilities to publishers who don't want Google to say "all your base are belong to us". But let's face it, when it comes to ad-serving networks, Google is, as a colleague said in a recent e-mail, a "media titan."

Private Equity Parent

Which brings me back to DoubleClick. In my mind, the interesting thing about the acquisition is not the competitive play of keeping a tired product like DoubleClick out of the competition's hands. DoubleClick has been a creature of its private equity parent for the past few years, and there wasn't any doubt that someone, someday would cough up the cash to take it over. So now that Google has it, what chance do DoubleClick's competitors have? I like Atlas, Acquantive's (AQNT) ad server. It is allegedly more precise than DoubleClick and, when it first came on the scene in the late '90s, tortured us at Forbes.com in terms of its precision demands. Quigo is a great company, out of Ziff-Davis, with a very aggressive attitude about niche paid search. As The New York Times noted on Apr. 17, all the ad server alternatives got a nice share-price boost thanks to Google putting a value and some attention on their market.

The more interesting thing is the potential for the DoubleClick deal to revive the market for banner ads. I've seen Google's pitch, and it goes well beyond the search terms that most people associate with the search giant. Video is now playing a stronger role in its pitch (it figures they have to do something to make good on the YouTube buy). And given the higher potential for online media to induce users to click on an ad and be redirected to a specific destination, advertisers are going to be drawn to the online 30-second spot (not pre-roll, which I don't like at all). This is great news for agencies that were worried about their TV practice. There is an avalanche of client demand headed their way for short, smart Web videos to stick into big interactive marketing units.