Jeff Molander_

Is Internet Advertising Really Worth Billions?

What does this (dependence of brands on Atlas and DoubleClick) say about how consumers use the Web? It says they use search to navigate -- not necessarily to discover.

Affiliate marketing, domaining -- search marketing agencies for that matter have all discovered and 'monetized' the fact. Where have marketers been? For how long will middle-men get to cash in on what amounts to navigational habit? As I see it, there's a sub-economy working behind the scenes: an 'ignorance economy' wherein what marketers' collectively haven't understood has been leveraged into cash.

As well, continued dominance of these companies is threatened by Web 2.0 -- namely the death of the browser and adoption of RSS/XML technologies that allow users to view the Web sans browser! Adoption of RSS has been rapid among popular hang-outs (i.e. Yahoo, MSN -- virtually every major portal provides feed aggregators) and relative newcomers like Bloglines.

With Nielsen et al setting up to focus less on pageviews and more on user "attention" (i.e. length of stay on publisher sites) we're forced to examine how today's major players will cope.

How is Almighty Google coping? One word: Feedburner. One of their smaller yet most important acquisitions to date.

Google-DoubleClick Deal Makes aQuantive More Attractive

Ben:
Mostly agree on first set of comments you offer. Here's the BIG trend that nobody seems to be paying much attention to (and perhaps?? what has agencies worried):

<i>Targeting is quickly becoming part of the "Advertising OS" of the Web and <strong>control is weighted heavily toward the user</strong>. </i>

Google calls it "personalizing" users' search experience.

Call it what you like, search itself is quickly becoming a realm that search engines (GOOG) control, not "Web page optimizers" or paid campaign optimizers. THAT is what's got everyone freaking out IMO. There's MORE "black box" control lately, not less. Google says "write a good ad... build a good page" and replies to "how?" with "like this, basically, and leave the rest to us."

S-C-A-L-E. Simplicity. If I'm an agency I'm concerned.

Re: Tacoda/behavioral targeting via a network... we're totally on the same page. Yahoo is already doing this across its network (just started -- or so they say).

Google-DoubleClick Deal Makes aQuantive More Attractive

Ashkan:
Thanks and yes... fully agree and it's helpful to know your background. I see where you're coming from better now. I entered "online" as a management consultant but cut my teeth as a co-founder and VP, Sales &amp; Marketing at what is now Performics... DCLK's marketing services division. That only lasted a few years and I'm back as a hired gun again now (consultant).

Aaaah. I knew there was something to your MTV comment. Thanks. Perspective is EVERYTHING!

Google-DoubleClick Deal Makes aQuantive More Attractive

Ashkan:
Thanks for the reply.

<strong>Google is hoping that F500 advertisers and ad agencies turn to it, but most media planners and buyers want to shift their money across many media suppliers while relying on a centralized technology supplier.</strong&g...

Precisely, yes. Yet I do believe it's possible for GOOG to offer agencies themselves a set of automation-focused tools while concurrently offering them to a totally different set of (smaller) advertisers. I don't much buy into the notion that GOOG will, via the DCLK deal, control so many page views that it will disrupt media buyers. It will simply make their jobs easier operationally. I don't see GOOG's move as one that would result in large advertisers taking media buying in house over it. If they did... well... that would be just fine by me :)

I think they want to have everything fragmented, as you suggest, based on their need to exist. That existence is being challenged by GOOG, yes.

<strong>DCLK or AQNT's Atlas is the tech supplier... advertisers choose on or the other granted, but on the media end of things, I do not think that advertisers will welcome Google as a trusted partner.</strong>...

Why? Respectfully, you're suggesting that a company who has managed to offer zero transparency and put the click fraud issue to bed is not lining up to earn trust? Candidly, who needs trust when advertisers can achieve this kind of scale? I'm curious as to your thinking here. Believe me, I know some advertisers who don't like the fact that the same company who measures ad ROI and sells the ads (and won't do biz with GOOG over it) but I know even more who do not, and likely will not, consider such things when slapping down their charge card for AdWords.

<strong>Agencies get 5% planning, 5% buying and 5% creative, Google effectively wants to take away the first 2 5% fees. </strong>

Sure... but I don't see it this way. As I stated, GOOG isn't interested, IMO, in competing for airtime among major publishers and advertisers (who are all wrapped up in behavioral solutions like Tacoda). They're more interested in the same play at social media monetization. Think AdSense on steriods. As Publishing2.0's Scott Karp put it recently (when considering what inline text ads inside social media/blogs could do for GOOG):

“With cost-per-click ads, spammers create bogus pages where confused consumers click on ads in an effort to escape. But with CPA ads, clicking is not enough. The game is now to manipulate consumers not only to click, but to take some further action. And I don’t use the word ‘manipulate’ arbitrarily. This is about turning the web into one big pile of junk mail, aimed at getting you to sign up, buy, or commit to something that you hadn’t necessarily wanted.”

I see GOOG doing things to remove friction, not aiming at taking things away from people. Why can't media buyers still buy media from 5 sources now rather than 6? I'm arbitrarily picking numbers to demonstrate my point but I think you may be over-reaching here.

<strong>
Then there's the publisher flight risk, MTV for example uses DCLK. Will they do that for much longer?</strong>

Maybe I'm being dense here but I don't understand why MTV would leave. <strong>

Lastly, DCLK's inventory does not in any way give advertisers access to the best, premium real estate.</strong>

No but I don't think GOOG cares about that. Does GOOG have prime inventory in its AdSense network? Nope. Any of its syndication networks? No again. Does it need to improve this? Yes -- and a mid-tier display network like DCLK seems just fine.

Again, where does GOOG make its money? In my experience/analysis, it's among the smaller to mid-sized advertisers. Of course, we cannot ignore segments like domaining which power a sizable segment of GOOG, YHOO's revenues -- all based on inventory that mainstream analysts (I'll go as far as saying) don't even realize exists!

<strong>
Publishers control that directly... and since they will be more reluctant to use DCLK's software (and give up valuable data to Goog) and advertisers will be reluctant to trust Goog, I see a lot of risk here.</strong>

Fully understood but, again, I don't see GOOG as <strong>doing anything </strong>that suggests they give a hoot about large publishers or advertisers... anymore than they care to cater to smaller to mid-tiers.

I posted this at your 4/3 entry and will do so here as well as the comments relate directly...

Respectfully, your suggestion that agencies will drop DCLK's tool set based on automation fears seems extreme. As well, aQuantive has proven that a company can successfully navigate these waters -- offering agencies a tool set (Atlas), distribution (DrivePM) while directly competing with them (AvenueA). Why can't big G do the same? I guess time will tell!

Google-DoubleClick Deal Makes aQuantive More Attractive

Ashkan:
In a market that doesn't like anyone's stock (all cash deals signal long term weakness) I, personally, don't see the valuation logic here. Google clearly isn't concerned with making investments in companies with an eye toward long term profit on that investment. These are strategic, yes, in a game of "keep away" so I don't see how such a game really translates to valuation in the case of Atlas -- unless the market is filled with GOOGs. In some cases it's "dumb money" but now a days we don't see much of that.

Also, don't forget that AQNT and DCLK have services divisions that are likely not factoring heavily into (revs around $80-150 million) valuation but they do factor in long term.

GOOG will begin to resemble aQuantive with a twist by carefully balance self-service ad management tools (aimed at advertisers direct AND agencies) with high end marketing services (via its Performics unit which looks a lot like AQNT’s AvenueA). This serves all advertisers: those who value self-service scale and those who need full blown agency services.

As well, GOOG’s display business is poised to take off as the company rolls out its new Doubleclick network in a highly scalable, self-service manner among existing advertisers. Competition for ads will increase and the offering pairs nicely with GOOG’s move into CPA. This will spur the company to offer all payment options (CPM, CPC, CPA) across all display and text ad networks.

Ultimately, GOOG isn't interested in competing with behavioral solutions like Tacoda et al... they're more interested in the same play at social media (user generated content) that YHOO is chasing. Their recent announcement suggesting that <strong>inline text ads </strong>is a next step for CPA clearly indicates this. It's all about monetizing inventory that's exploding. Lots going on here concurrently as I see it.