During Google’s troubled earnins report (see our coverage of that here), Eric Schmidt jumped in to talk about Google’s boundaryless display and video advertising revenue opportunities. Comments Henry Blodget:
Amid battering from analysts on unit growth, CEO Schmidt jumps in to remind everyone about the display revenue and YouTube opportunities. Out of character and probably a direct response to the quarter miss and resulting analyst pandemonium.
I do think that YouTube remains a vastly untapped but not obvious opportunity (disclaimer: WatchMojo.com provides content to YouTube as a professional producer).
But Doubleclick? Doubleclick did $300M in revenues in 2006 but has since lost some accounts (IAC, for example). So net-net, I’m not sure Doubleclick’s revenues will make a dent on Google’s massive $15B revenue base.
Moreover, ad serving is a low margin, competitive space. Plus, with open source ad server OpenAds raising $15M and “shrinking the ad serving market” I doubt Google will generate much more than $300M per year off Doubleclick in years to come. If anything, Google might take the price of ad serving close to zero (and pull an Urchin, ie. make it free to bolster its bread and butter which remains AdSense/AdWords).
But most importantly, let me grab my bullhorn and repeat:
“A lot of people said Google just hit a home run in online advertising by buying DCLK, they were wrong because saying DCLK is an online advertising play is akin to saying MSFT is strong with ad agencies because ad agencies use powerpoint in their client pitches. DCLK sold all of its media assets to L90/MaxOnline when ad rates were low and no one really paid CPM rates, and got into software only”
Doubleclick gives practically zero exposure to he faster growing display banner business. Google bought a software that is a commodity, a valuable piece of software, no doubt, but not one that will generate billions in revenue.
What should Google do right about now? It should buy Tremor Media or Broadband Enterprises, or maybe Brightroll. Read more on that rationale here.
To dive into display advertising they’ll need a media / sales platform, one company that could be interesting would be Tribal Fusion, one of the remaining ad networks that focuses on display advertising. There’s Valueclick, too, but Valueclick comes with a few more risks and baggage. Plus, Valueclick is more of a CPA play, whereas Tribal Fusion is a hybrid play with a CPM slant. For the difference between CPM and CPL and other ad terms, click here.
As per monetizing YouTube, trust me, I’m ahead of you! But that’s all I will say, for now.
See HipMojo.com’s post on the Doubleclick / Google deal below:
- Google Buys Doubleclick for $3.1 Billion; Blocks MSFT Acquisition
- Questions in Wake of DCLK/GOOG Deal; MSFT/YHOO Repercussions?
- Two Variables in DCLK/GOOG Deal: Dart for Publishers/Advertisers; All Cash Deal
- Why GOOG’s DCLK Makes Little Sense (To Me)
- DCLK Winners: Hellman & Friedman; Losers? DCLK’s Shareholders?
- aQuantive Under Spotlight
- Why aQuantive is Worth 2x Doubleclick
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