Scott Cleland on Google-Doubleclick: `Competition Foreclosure’

We agree with much of Mr. Cleland’s analysis that the Google acquisition of Doubleclick raises serious concerns about the future of the digital marketplace. But, unlike Scott, we believe the deal has critical antitrust implications (and has nothing to do with net neutrality). Here are key excerpts from his longer piece:

“Just as Microsoft vertically-leveraged (bundled/tied) its operating system dominance to dominate the office applications market via the Windows platform, Google apparently looks to vertically-leverage (bundle/tie) its keyword search dominance with DoubleClick’s leadership in online banner/video display advertising, and with its Google-YouTubedominance in video search…This vertical combination reportedly could give Google-DoubleClick upwards of 80% of the overall market for advertisements provided to third-party websites. Just like Microsoft became the default office applications platformfor email, e-calendars, word processing, spreadsheets, and PowerPoint, for any user, Google has obvious designs on becoming the default Internet advertising broker/platform for: keywords, website display ads, and TV, radio, newspaper/magazine advertisingfor the average large advertiser… If Google can gain the first-mover advantages of offering advertisers the super- efficiencies of cross-media-platform advertising optimization, i.e. a vertically-integrated/tied advertising platform, individual advertising mediums and companies will largely be at their (anti-)competitive mercy going forward. Game. Set. Match…The DoubleClick acquisition, like Google’s acquisition of YouTube, is really all about achieving competitive foreclosure long term. Google’s “partnership’ strategy is also all about competitive foreclosure…”

“Google Achieves Behavioral Targeting Nirvana” [recommended reading. Excerpt]

The following in an excerpt from an article by Rich Tehrani, president and editor-in-chief, TNC. We urge everyone to read the entire piece:
“Imagine a world where advertisers would be able to predict your detailed behavior online. They would know when you are about to buy a song, a car, a present for your spouse – they would know virtually everything you are thinking. If you believe this is impossible then you would be wrong as there are a few companies who have access to enough Internet data to make this privacy lover’s nightmare a reality and believe it or not a relatively new science called behavioral targeting is taking the online advertising world by storm… Last week however the game of behavioral targeting got even more competitive as Google announced they are purchasing DoubleClick. DoubleClick is the leading company in the business of displaying advertising online…With the acquisition of DoubleClick, Google now has access to the cookies and subsequently browsing history of vast numbers of web users. It would be fair to say that greater than 85% of Internet users frequently come into contact with ads served by DoubleClick. In addition there are a vast number of sites serving up Google’s ads and running Google Analytics. Google perhaps now has access to the behavioral information of over 90% of web users.
One can expect Google to start mining DoubleClick’s databases immediately and in the process, cross reference this data with its own vast databases of search history and perhaps even Gmail content.”

U.S. antitrust regulators:

Just a pointer to the U.S. officials who will be reviewing–and hopefully denying–GoogleClick.

Excerpt: “XM Satellite Radio and Google Deliver Targeted Advertising to Satellite Radio Listeners

MOUNTAIN VIEW, Calif., and NEW YORK, NY, August 2, 2006 – Google, Inc., today announced that it has reached an agreement with XM Satellite Radio, the nation’s leading satellite radio service with more than seven million subscribers, (NASDAQ: XMSR) to introduce and make available commercial advertising inventory on XM’s non-music channels to Google’s extensive advertising base through its dMarc media network ( As part of the deal, Google advertisers will now have a simple, automated way to reach XM’s millions of subscribers nationwide and XM will have access to Google’s large and small advertisers to offer relevant, targeted messages to their subscribers. After months of trials, the new platform is now in full production giving Google advertisers distribution through XM Satellite Radio…Google AdWords’ customers will be able to place terrestrial and satellite radio spots when the dMarc platform is integrated into AdWords targeted for fourth quarter of this year.”

and from Reuters: Google, Clear Channel Ink US Ad Deal [4/16/2007]
Web search leader Google has broken into radio with a multiyear advertising sales agreement with the largest U.S. broadcaster, Clear Channel Radio, the companies said on Sunday.

The deal, long anticipated by the radio industry, marks the progress Google is making as it expands into off-line media, not just in radio, but also television and newspapers—even in the face of resistance from some traditional media players.

Last week it revealed a parallel deal to supply satellite TV broadcaster EchoStar and its 13 million viewers.

Clear Channel said it has agreed for Google to sell a guaranteed portion of the 30-second spots available on its 675 radio stations in top U.S. markets, in a bid to expand the universe of local radio advertisers to Google’s online buyers.”

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Doubleclick’s “Performics” division: The “largest search-marketing firm” says Ad Age [4/13/07]

“Performics, the performance-based marketing division of DoubleClick, provides online marketing services and technologies for leading multi-channel marketers. Together, Performics and DoubleClick offer clients an unparalleled range of marketing solutions and are uniquely positioned to compare effectiveness across marketing channels for valued clients. Advertisers benefit from Performics´ custom approach to Affiliate Marketing, Search Engine Marketing, Data Feed Marketing and Online Lead Generation programs. Performics’ proprietary tracking and reporting technology platform, advanced market expertise, and active account management enable clients to acquire and reacquire online customers. Performics is the only recognized industry leader providing both Search Engine Marketing and Affiliate Marketing Services.” from About Us

Clients: “More than 300 clients, including America Online, Blair Corp., Bose, Cingular, CompUSA, Eddie Bauer, Fairmont Hotels, HP Shopping, J. Jill, Jos. A. Banks, Kohl’s, L.L. Bean, Motorola, OfficeMax, PC Connection, RedEnvelope, My Sony, Quickbook, Staples, Verizon Wireless, and Wyndham Hotels.”

FeedLab: “Performics developed FeedLab to automate cross functional processes and scale data feed marketing programs… FeedLab not only scales the delivery and optimization of data feeds, but the technology integrates input from “paid search” results, search queries and third-party information to improve the relevancy of the data feed and enhance an advertiser´s results…FeedLab also manages an advertiser´s data feed with comparison shopping engines, Web publishers and participants in the Performics affiliate network. There are currently more than 100 online publishers utilizing client data feeds through Performics.”

Attention European Commission: Doubleclick’s Own Warning About Google’s Growing EU Clout

In Doubleclick’s “The European search advertising landscape, 2006” report, they note that (excerpts):

“Google dominates the continent

Google dominates the search market in Europe, and this is especially true so outside the U.K. In Germany, Google’s market share approaches 90%. “The game in Europe is Google,” declared Andy Atkins, CEO of WebCertain…Google sites are also visited by a greater proportion of visitors in Europe (75%) than in the US (60%)…in July 2006, Google sites were the most visited online destinations in Europe with over 150 million unique visitors in that month. The dominant search engines in Europe are also the largest media owners—Google, Yahoo and MSN…The European online ad market is concentrated in the hands of a few major players.”

Research report press release

available as pdf via Google UK homepage

What Doubleclick also knew about you: Abacus Catalog Alliance

“With more than 3.5 billion transactions from more than 90 million U.S. households, the Abacus Alliance Database is the largest proprietary database of consumer transactions used for target marketing purposes. Abacus combines the power of this shared data with advanced statistical modeling to help Alliance participants improve profitability and increase market share.

With the Abacus Catalog Alliance, marketers can leverage transactional data to identify new customers and optimize the profitability of their existing customer base. Abacus data allows them to understand what customers actually buy, not what they say they buy. No one else can offer them the same advantages.

Alliance membership is for sophisticated marketers who are looking for a large universe of quality names and proven modeling techniques to increase their revenue and profitability.”
From: Doubleclick UK (accessed April 15, 2007)

“The Abacus Alliance database contains transactional data with detailed information on consumer and business-to-business purchasing and spending behavior. Over the past ten years, transactional data has proven to be the most effective predictor of future buying behavior. By combining transactional data with advanced statistical modeling, direct marketing can help marketers target the potential consumers that are most likely to buy their products or services.”

From: Direct Marketing (Doubleclick UK) Accessed April 15, 2007

PS: Aliance Data acquired Abacus in December 2006. But the Doubleclick UK site contains the above information as of today.