About 20 minutes ago Google announced that they have agreed to acquired DoubleClick for $3.1 billion in cash (nearly double the size of their YouTube Acquisition). Microsoft was reportedly in a bidding war with Google for the company. Google gets access to DoubleClick’s advertising software and, perhaps more importantly, their customers and network.
DoubleClick was founded in 1996. DoubleClick was taken private in 2005 by Hellman & Friedman and JMI Equity for $1.1 billion. The New York Times is reporting that DoubleClicks revenues are about $300 million/year.
10x revenue for a mature company is a…healthy…valuation. At least part of the acquisition price appears to be due to a desire by Google to keep this asset out of Microsoft’s hands.
wow!
Wow – That’s a BIG Acquisition! The question is — is it worth that much?
What do you think?
300mil/year …. plus an obvious growth strategy …. I think so
great googly moogly! 2 youtubes!
I think so too:
http://techfold...ick-31-billion/
Inventory/Software/Relationships/KillMicrosoft — its all upside.
Not only double the size of Youtube, but the whole $3.1B was in CASH. Compare that to Youtube, where only $15 MILLION of the $1.6B deal is in cash. Google can’t just churn out more stock to cover this deal…they had to dig into their cash reserves (of which, admittedly, they have a lot.)
Obviously they are trying to create a monopoly on online advertising by buying out any potential competitor. Like the youtube purchase, it will be a waste of $3.1B.
You can listen to the conference call:
“The company will host a conference call and webcast at 2:45 p.m. Pacific Time (5:45 p.m. Eastern Time) today to discuss the acquisition. To access the conference call, please dial 866-288-0543 domestic and 913-312-6664 internationally. A replay of the call will be available until midnight, Friday, April 20, 2007 at 888-203-1112 domestically and 719-457-0820 internationally. Confirmation code for the replay is 8456893.
A live audio webcast of the conference call will be available at:
http://investor...om/webcast.html
P.S. Oh snap! Another defeat for Microsoft. w00t!
leaving msft/goog competition aside,
wall street dealmakers 1, google dealmakers 0
Assuming they’re still growing I’d say it was worth it. They make $300m/yr in revenues (NYT) AND Microsoft doesn’t get to own them either. Google has plenty enough cash to not sweat over buying them, and they have the added security that their biggest competitor didn’t acquire them either. Not only that, but Google is, after all, an advertising business. They need all the advertising technology they can get, and for big companies like GOOG and MSFT, it’s usually easier to just pay for the people/technologies than play catch-up and develop in-house.
The reason??
DoubleClick’s chief executive, David Rosenblatt, said a few weeks ago that “—–> a new system
wow, google owns the web advertising world!
This is a stupid deal. Adserving is a commodity business. Adservers are charging $.02 cpms nowadays. Google could have developed a superior adserver product for a tiny fraction of the cost of this acquisition and offered it for free, if the publisher accepted google adsense to run on their remnant inventory, disrupting the entire adserving industry.
Monopoly Mik? Come on, have you ever seen ALL the options for advertising on the internet? The only thing they monopolize is providing the most value for the advertiser. I look forward to this acquisition improving that value.
I think that Google is after DoubleClick’s software that has potential use in offline advertising as well. An area that Google has tried and failed to get into to.
Sounds like a good deal to me.
http://www.yout...h?v=wxTIV2WcCP0
http://en.wikip...iki/DoubleClick
Twenty minutes, huh? And already some geek put it on the wiki.
If Microsoft was interested and they lost it to Google, this is another blow for MS no matter how crazy you think the price is.
This cannot compare to YouTube. One’s a money bleeding machine (YT), surrounded by lawsuits, still figuring out hteir business model, etc. while the other one is a company with solid revenues per year, a technology that goes beyond a neat flash video viewer, just to name a few things.
wow – general rivalry + bid wars = huge payout for DoubleClick! Good for them!
Jason Alba
CEO – JibberJobber.com
This just seems like a ridiculous purchase for Google, especially when you consider it’s ALL cash. Deals of this size, even ones substantially smaller, are usually almost all stock. That aside, I still don’t see why Google would want this company. Everyone hates DoubleClick.
It’s Friday the 13th… surely this can’t be good news?
YouTube + DoubleClick is worth the billions. Google now has access to the blue chip advertisers who will spend money to get their brand in front of the YouTube audience.
Google has to be careful not to let their unfriendly tech focused ad staff near the experienced people focused DoubleClick staff. Everyone at the top levels of Google needs to learn how to pay nice with other companies if they want to compete in the “conversation sell” display ad business.
DoubleClick got written about in The Long Tail, its model compared with Google’s AdWords, and not favorably.
Microsoft actually comes out kind of savvy looking, I think, forcing Google to pay that much for something that Google would have killed off eventually anyway if they wanted to.
Ewwww. Did I just say something nice about M$?
Of course, Google Video could have eventually killed off YouTube, so I’m clearly missing something with both deals. It may take a few months or years before we really know what the deal was.
Game over.
Yahoo and Microsoft now have *no* chance to catch Google in online advertising.
I guess the cycle begins anew, and in 10 years someone will dethrone Google.
http://www.dartmotif.com – A DoubleClick owned solution.
DoubleClick was already making strides in monetizing video.
What was the exact amount? If it was for $3.14159265 Billion, that would rock. Too bad it wasn’t for e. Is 2pi next? Or maybe Avogadro’s number.
Well the call just ended at 6:30EST and it was a doozie! Google finally seem to wake up and realize that graphical advertising is the path to full ad world domination. It mainly seemed like screened questions, but overall everyone seemed excited and no one overly concerned about the massive monopolistic play on the entire advertising world by Google. Read more…
Meine Gute!
Don’t understand how Microsoft could lose a CASH bidding battle to Google – not like the stock deal for Youtube, this was straight up $3billion in cash… wow. Bill must’ve forgot the cheque book at home…
Its not that Microsoft couldnt have outbid Google, I think that DoubleClick made a lot of sense with Google because its largest client AOL is also one of the largest clients and partners of Google.
Going with MSFT would have resulted in a potential lose of AOL. So may be they used MSFT to pump their valuation and then let Google do the rest
No mention of DoubleClick publishers huh? Everyone talks about “value to the advertiser!” – but if NYTimes, AOL, Fox Interactive pull out of their Dart deals, guess what? DoubleClick just became worth much less. Why would they pull out? Why wouldn’t they is the question – Google is shaping up to be probably the most serious threat to the advertising ecosystem that exists, from agencies to clients, and I wouldn’t want Google having a soup to nuts window into my advertising revenue stream, from performance based key word stuff to display? Google as the ulitmate gatekeeper for ad dollars? Nope, no thanks.
I think this one has blowback written on it.
To me the most telling part of the deal is that Doubleclick’s investors refused google stock and demanded cash.
This suggests that those “in the know” at Doubleclick believe either that the deal will not reflect favorably on google’s share price, or more likely that google’s share price does not reflect reality.
Consider how easily Google could have, say, offered $4B for the company and payed only a fraction in cash. Odds are this deal was offered and refused by Doubleclick.
$3B in cash and $0 in stock is the COMPROMISE that the two sides came to on the matter.
Brian gets it. Publishers using DFP are key to Doubleclick’s value. Right now, there’s a decent amount of chat about this on a listserv with the 100 or so top ad ops managers in the country. Many online publishers see Google as a competitor. Now, that competitor owns their ad server. There’s enough good competition in the ad server market to make switching a relatively easy option.
A couple of weeks ago, when it was first reported that Microsoft was considering DoubleClick for $2B, people were saying that it was ridiculous and that it would never happen. I new it was not ridiculous but the strategic value to MS because of they distance behind Google in the online advertising world. Google knows how to make money with that acquisition and distances Microsoft and others even more.
Bravo!
Nothing else to say.
That acquisition makes http://www.zebo.com that last large scale independent ad server in the world. Most other ad servers switched to ad network business. I guess ZEDO is next on the acquisition list.
Brian – good post!
In my experience Dart is terrible, terrible, terrible. I’ve got to believe Google could be something far superior for far cheaper and hire one hell of a sales team leveraging the Google name to get the client list that Doubleclick has. This acquisition has to just be to put a pie in Microsoft’s face. I’m actually pulling for MSFT in this war.
be should be build….
Mistake in the URL in the post above: it should be http://www.zedo.com
Brian said it’s a “threat to the advertising ecosystem.”
I recall the recent news about DoubleClick’s Advertising Exchange trial, and Google’s deal to launch the automated system for buying, selling, delivering and measuring television ads on EchoStar DISH Network’s 125 national satellite programming networks — both announced the first week of April.
How will traditional advertising agency executives — with an office full of media buyers — react to the news that the two companies who want to create a fully automated ad auction environment just joined forces?
OK, so maybe it’s a rhetorical question
Perhaps Microsoft and Yahoo! tag teamed to make Google burn its war chest knowing that Google is desperate to diversify its revenue as Microsoft and Yahoo!’s Search technology is quickly coming up to parity and will drastically cut down on Google’s margins going forward.
So Yahoo! bid up YouTube knowing Google is desperate for the money losing sinkhole and Microsoft bid up DCLK.
Bravo Microsoft and Yahoo! You go guys!
$3b in cash… freaking huge!!! Google becoming more and more advertiser than search engine
What will happen next?
Another thing… I had read the title as “Breaking Google”.
I wouldn’t be surprised if the YouTube and DoubleClick acquisitions turn out to be the straw that broke the camel’s back. LOL
What’s the valuation of keeping this away from MSFT? high…
and the real winners here are Hellman and Friedman with their 182% IRR and 3x cash-on-cash in 2 years, jesus.
Watch GOOG hit 10+ points Monday morning
Micro$oft could not afford no buying DoubleClick but of course they couldn’t get over the fact that they are not and they won’t any longer be the only company worth a titanic amount of cash. I’m surprised they even made or considered making a 2 billion bid being the cheap company that have always been; always trying to buy companies for a dime after they realize they were not successful at making a copycat of the target acquisition.
Micro$oft is drowning.
Go Go Microsoft “Gadgets”!
Seriously, MSFT wouldn’t know what to do with them. I’m still waiting on Kahuna.
brian, bmof, wilson, and yt all nailed it. agree 100%
another interesting tidbit…..Wenda Millard – current Chief Sales Officer at Yahoo was a co-founder of DCLK back in the day.
do you think yahoo knwos something the others don’t? i’ m specualting here, but its a nice little coincidence nevertheless.
Doubleclick had such a huge advantage because they had a lock on both sides of the business with DFA and DFP. What’s really interesting is that Atlas bought Accipiter a few months ago, bringing the first real competition to that 360-degree publisher-agency combo. The integration has been slow, but money and focus could fix that. A real combined agency/publisher solution would be a huge threat to DoubleClick’s value – particularly if those major DoubleClick publishers started moving away from DFP in a hurry. The agencies would likely follow. If I were in charge of Atlas right now, I’d see this as a huge opportunity and leverage the farm to take advantage of it. Start by making integration hooks with all the existing major ad servers you can find to ease delivery and reporting from Atlas to the publishers….
wow – its a great news. Google is doing revolution.
Mr.Sebastian, I can’t accept that !!!!! Microsoft will never drown. Microsoft is a big fish.
Regards,
RaJ
http://www.sugg...stusability.com
If Google can do to content ads what they did to search ads, this is great news for publishers.