This is a follow-up to a post I wrote last April - Why the Google / DoubleClick Deal is Brilliant - when Google announced they were buying DoubleClick. I made a number of predictions at the time and thought it would be interesting to see how I fared. Turns out I did pretty well overall, although the jury’s still out on a few predictions.

I’ve given myself a grade for each of these predictions. Self-grading seems unfair, so let me know if you disagree with my grading scheme.

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SNAPSHOT:

• Search revenues are projected to triple to $44.5B over the next 5 years (Piper Jaffray). Google is already positioned to capture a significant majority of those revenues.
• But Search only represents ~50% of all online advertising revenue (current & projected)
• This deal is about positioning Google to go after the other 50% of revenue projected to come from non-Search ads

PROJECTED GO-TO MARKET STRATEGY:

Google is most likely going to bolt the DoubleClick ad server platform and ad network on to their existing AdWords system over time. By doing so, Google will open up a lot of additional graphic/rich media/video ad inventory for AdWords, addressing a big hole in their current offering. While they’ve had the ability to serve up banners and video ads for a while, non-text ads currently account for only a tiny slice of their overall inventory and revenue. When this happens, Google will not only be serving those ads – they’ll be selling that inventory.Why? Because Google’s huge network of 500,000 advertisers will help publishers monetize that inventory better than they can themselves. And if Google needs to partially subsidize some of those high-value publishers by paying guaranteed CPM’s for some time, they can do that. They certainly have the cash. And that will quickly become a moot point as the big brand advertisers (and their agencies) who are currently buying that inventory directly at high CPM’s will realize they’ll need to buy that inventory via Google or risk losing it to a higher bidder.

They will probably continue to offer the DoubleClick ad server product as a standalone product for quite some time so as not to alienate existing advertisers/agencies or publishers, but the real goal will be to make participation in their marketplace a no-brainer for everyone by offering better distribution and accountability for advertisers and better monetization for publishers. As Google gains more advertisers and publishers, the holdouts will have a harder time resisting the gravitational pull.

WHAT IT MEANS FOR:

Advertisers - Win
Online advertising gets more efficient. With Google as the primary hub and marketplace, advertisers get to deal with one entity and cut one check for most of their online advertising. Managing those campaigns will be very complex, but will still be much more straightforward than dealing with individual publishers with different pricing and deal structures.

(Read the full article…)