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Why its signficant advertisers seek FTC/Google-Doubleclick scutiny?

Ad Age reports that the two largest Advertising Associations have asked antitrust officials to look into the spate of major advertising acquisitions; Google-DoubleClick, Microsoft aQuantive, Yahoo-Right Media, and WPP-24/7 Real Media.

  • The thrust of the letter:
  • "During the past month, there have been several major acquisition announcements in the online advertising marketplace... These mergers, if approved, certainly would change the online advertising marketplace. As such, those proposed combinations deserve careful scrutiny. It is essential to ensure that none of these combinations restrict competition in the Internet advertising marketplace."

Why is this significant?

  • First, the advertising community does not like to make waves or speak ill of any potential client -- in any way in public -- it goes against their normal business practice.  
    • The fact that they did speak up and that they did ask the Government to give all these mergers close scrutiny -- was their indirect/politic way of getting their point across without stepping on any one company's proverbial toes.  
  • Second, I think they are genuine in their shock and bewilderment that their entire industry has been transformed before their eyes in a matter of weeks.
    • The online technology players have swooped in and made it clear that  technology and measurement tools are advertising's future.
      • The tail will now wag the dog.
    • Advertisers and advertising agencies must adapt or be left in the dust.
      • WPP, for one, has quickly adapted with its purchase of 24/7 Real Media.

It is my view that there is a whole lot more going on here than meets the eye.

  • Google has unilaterally driven the Internet overall to an ad-based business model and Microsoft and Yahoo are desperately trying to catch up.
    • My view is that the search game is effectively game over.
      • Microsoft and Yahoo can't catch up if they keep falling farther and farther behind.
    • Microsoft's/Yahoo's mergers will distract folks for a while longer by creating some plausible hope that search and online advertising will still be competitive going forward.
    • My view is also that Google-DoubleClick is an absolutely brilliant strategic move by Google to dominate online advertising more broadly, and that if they succeed in gaining approval from the FTC -- they will dominate online advertising generally as they have search specifically.

When the advertisers and advertising agencies get over their shellshock, and clear their heads to discern what has just happened to their business, I suspect they will become much more active with antitrust officials behind-the-scenes.

  • Survival and self-interest will likely overwhelm the advertisers current instinct to mind their manners and not rock the boat.    
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