The European Union had the power to prevent Google’s acquisition of DoubleClick. Last week, the regulator unwittingly set a milestone in the history of the Internet. They greenlighted Google’s absolute supremacy over Internet advertising, a position comparable to Microsoft’s domination of PC operating systems, Windows, and applications, Office. To get a fresh read of the kriegspiel, Monday Note spoke last week with Alain Levy, CEO of Weborama a fast growing player in the European internet ad sector. Some excerpts follow:
On the EU’s motives for approving the deal, Alain Levy : “European regulators undoubtedly performed a very thorough investigation before making their decision. They sent us a detailed questionnaire; however, it was limited to pure competitive considerations. Issues such as privacy, the protection of personal data, where not addressed. To me, these remain key questions. Microsoft’s attitude contributed to the outcome : first denouncing the deal as the quintessence of anti-competitive behavior, and then bidding for Yahoo. In doing so, Microsoft killed most of the arguments against the DoubleClick acquisition. It is quite possible Microsoft had a clue about the upcoming decision of the EC”.
On the monopoly issue and consequences for others players: “…I can’t think of a better definition of a monopoly than the new position assumed by Google in the ad-serving market. The tremor will be felt in many areas. Google will control critical parts of the business. Advertisers will lean to go with them more than ever. Agencies will be squeezed by Google’s propensity to talk directly to advertisers. I don’t buy Eric Schmidt’s [Google's CEO] statement about its willingness to preserve the brand-agency relation, we already have many indications that they will do exactly the opposite [see below].
Even the rules of merger and acquisition will be effected: “…Thanks to its unprecedented access to market data — CPM, market share, revenue structure, demographics — Google now has the ability to assess in an instant the value of almost any player in the market, on the ad side, as well as on the publishing side. This is a decisive advantage when looking at potential targets, especially with a current market cap of (still) $137bn… Conflict of interests are lurking everywhere — especially in a totally non-regulated business. Today, all media companies and communication groups — internet and non-internet — are thinking: How do we position ourselves, how do we adjust our strategy in light of this acquisition?”.
Is there still room for independent players ? “…Oh, yeah! More than ever, actually. From now on, any brand using Google’s ad serving does, in fact, give up its entire inventory; those who work with Google for media buying deal with someone controlling 40% to 60% of the market. And advertisers who are already DoubleClick’s clients become totally transparent for Google. In such an imbalanced environment, yes, we have a lot of room to grow”.
Further readings :
These figures are amazing : every month, for each visitor, Yahoo collects marketing data 2520 times ! For My Space, the figure is 1229 times, for Google: 578 times, the New York Times, only 45 times per visitor and per month. This also shows what’s really at stake with the Microsoft/Yahoo battle : Yahoo is able to get data on 400 billion events per month, Microsoft only 51 billion.
> This article in the New York Times, reveals the depth of advertising-related data sites are able to harvest.
> and here on NYT Bits
Here is why the entire advertising food-chain has good reasons to be worried : “Google’s strategy is to have advertisers load their entire ad budgets into Google’s system, which would allocate spending across media whether online or offline”. Says who ? Tim Armstrong, Google’s president for advertising.
> more here
Google waited no more than three days after the decision of EU regulators to launch its Google Ad Manager. This is a crystal clear indications of Google ambitions : sterilizing the market, not with Microsoft-like intimidating practices, but simply by giving for free what others will charge. For Google, giving away some ad serving features is simply a way of generating new streams of cash. Thanks to its gigantic infrastructure, the “price” of the gift is marginal. And for the site publisher, choice between being limited to a midsize Ford for free or paying full price for a Saab is simply a no-brainer. As for Google Analytics that gives access to powerful traffic tools for free, Google Ad Manager will prove to be the lethal weapon to capture market share.
> see how Goolgle it works How big Google display advertising business could be ?
>Here are some answers.“There Will Be Blood” : collateral damages will be serious in the wake of the DoubleClick acquisition.
>read some self-explanatory quotes of Google’s CEO Eric Schmidt in Silicon Alley Insider. and a more PR polished version, his interview in Portfolio.