Posted by: Catherine Holahan on March 13, 2008
Google opened a window March 13 into what its ad business will look like with DoubleClick in the mix. And it could be the competition nightmare that some feared.
Less than two days after European anti-trust authorities approved the search giant’s $3.1 billion acquisition of the leading ad-serving firm, Google unveiled a product for delivering ads that it has not sold. Google Ad Manager enables Web site owners to track the performance of ads sold through internal channels, schedule when and where those ads appear, and compare how much money is generated by individual ads. The service, which is still in a private test period, is similar to what DoubleClick does for publishers, albeit on a smaller scale. “Google Ad manager effective complements the DoubleClick Revenue Center, which is focused on publishers with larger sales teams,” wrote Rohit Dhawan, a senior product manager in a blog post.
Ad manager users do not have to be AdSense customers. But, given that Google has integrated the product with AdSense, odds are that they will soon sign up. The AdSense integration will let Ad Manager customers know when an AdSense ad is available that could perform potentially better than their existing advertising inventory. And why would a publisher turn down more money?
Clearly, Google’s goal in offering such a free service is to improve the quality of Web sites in its AdSense network. The new product is meant to attract sites that have their own ad sales teams. Such sites likely have more professionally produced content than, say, smaller blogs or user generated content sites without ad sales teams. As these sites use the service they may see that Google has ads capable of filling empty spaces on their site, or generating more revenue than their existing inventory, and join Google’s AdSense network.
“There have been numerous days where we made more money because Ad manager was able to auto adjust and send AdSense more inventory,” wrote Vadim Telyatnikov, Myyearbook.com’s director of ad operations in a product testimonial.
Seeing this service, it seems likely that Google will eventually offer AdSense integration to DoubleClick customers as well in hopes of converting some of the ad-serving firm’s high quality clients into AdSense customers. Doing so could work well for Google. Undoubtedly, some DoubleClick customers would see places on their site where a Google ad would perform better and be inclined to opt for the higher-paying ad.
Of course, this could also create the nightmare scenario of which many who argued against a Google/DoubleClick acquisition spoke. DoubleClick customers would eventually become part of Google’s AdSense network, further expanding Google’s scale and giving it access to inventory on some of the most visited sites on the Web.
Should Google integrate AdSense into DoubleClick’s ad serving offering, DoubleClick customers could still work with other ad networks. But those ads would always be placed in clear competition with a Google ad, since their performance would be charted and measured against what Google AdSense could offer. If the other firm didn’t offer the best results, it would lose out to Google.
To some, that may look like fair competition—may the best ad win. But, since Google’s ads are the only one compared every time, it looks to me like Google would have a significant advantage under such a model. It looks like a recipe for expanding Google’s dominance of the $28 billion online ad market far beyond the 40% it currently controls.
After the European Commission approved the DoubleClick acquisition, Jeff Chester, executive director of the Center for Digital Democracy, wrote: “By failing to impose safeguards, EC regulators have helped strengthen a growing digital colossus that will now be in the dominant position to shape much of the global future of the Internet and other online media.” Those words are looking less and less like hyperbole to me.