Ad Network consolidation

This April, Google announced their acquisition of Doubleclick. This was for a whopping $3.1 billion dollars. This has signalled the first step towards online Ad network consolidation. This is because, soon after, Yahoo too has announced their complete takeover of RightMedia. This was for $680 million (Yahoo already owned 20 percent of the company)

For Google, this acquisition widens the entire scope of their advertising operations in the internet. This is because Doubleclick has a portfolio of products which Google can leverage. The most important is the DoubleClick Ad Exchange program. This is an impression based advertising network which connects the advertisers with the publishers. Doubleclick already enjoys a huge publisher and advertiser base, and hence Ad Exchange is touted as the next big thing for Doubleclick. This apart, they also have other products like Performics, something quite similar to CommissionnJunction, a website for affiliate webmasters). The acquisition hence takes Google much much beyond where they are, in terms of Adwords and Adsense.

Yahoo’s acquisition too, is right on track, and with the acquisition of RightMedia, have taken the company that directly challenges DoubleClick Ad Exchange. These websites also manage the ad inventories for many other popular websites. Yahoo could also possibly take over Microsoft’s advertising operations, if not be acquired by MS; which is a huge ask.

What does all this mean to you, as a publisher or an advertiser? With increasing consolidation comes increasing bargaining power. Google already enjoys such a huge competitive advantage, that they exploit with not revealing the share of money that the publisher earns per ad click. This acquisition widens the area where they can flex their muscle.

The same, however cannot be said about Yahoo’s acquisition. Yahoo has come to be the second best always, losing out to Google. However, Yahoo’s acquisition of RightMedia is more of a reliever, since this puts DoubleClick’s direct rival also in strong footing. This will ensure that DoubleClick does not end up wiping away competition. The balance thus continues to remain steady. However, it shall be interesting to revisit this story after a few months where things will be more clear on the implications of such an acquisition.

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