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Google buys DoubleClick for $3.1bn cash

Fiscal sense still in beta

Internet text-ad broker Google has purchased leading computer-tracking cookie provider DoubleClick for $3.1bn cash, the two companies announced today.

The acquisition is Google's largest to date, just six months after purchasing YouTube for $1.65bn in stock.

The move wraps Google's e-tendrils around DoubleClick's extensive portfolio of advertising companies as well as providing a scurrilous how-do-you-do to Microsoft, which was also eyeing the online ad serving company.

Google became a direct competitor to the New York-based DoubleClick when Google began brokering banner ads in addition to its core text ads in 2005. While Google will inherit DoubleClick's extensive advertising software, the real meat of the deal is the relationships with top advertisers and publishers such as MySpace and The Wall Street Journal. We are a DoubleClick customer too.

The purchase is a blow to Microsoft which began bidding for the company in March for the tune of $2bn from the equity firms Hellman & Friedman and JMI Equity. Microsoft has struggled to catch up to Google in the advertising racket, and chances are, will continue do so since Google found the extra billion under the couch cushion. But at least it forced Google to overpay for its latest trophy. Yahoo! and AOL were reportedly window shopping the deal as well.

DoubleClick generated about $300m in revenue last year.

The advertising coup may take some wind out of Yahoo!'s sails which launched Panama, its new contextual! ad! program! in the US late last year and is expected to expand to the UK this quarter.

Google is enlarging its AdSense online network beyond text-based ads as well as testing the waters of television, radio and newspapers. On Wednesday, Reuters reported that Google was in talks with satellite TV broadcaster DirecTV over an advertising deal.

The deal raises some speculation on possible acquisitions of online advertising brokers such as publicly traded ValueClick and 24/7 Real Media. ®

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