Google DoubleClick acquisition brings threat to affiliates
Google’s recent acquisition of Doubleclick has set off alarm bells at R.O.EYE and others in affiliate marketing. The $3.1bn acquisition strongly suggests Google’s desire to break into the affiliate space.
And who can blame them. Affiliates, in the UK alone, helped to generate an estimated £2bn in e-commerce sales in 2006. This figure will only increase in 2007.
The acquisition, if this is indeed Google’s plan, is a cunning move as Google often reflects, through penalisations, that affiliates detract from the “optimal” user experience.
As Google currently tests its CPA based product however, this desire becomes even more evident. The one drawback for this model being that it is dependent on advertisers implementing Google Analytics tags on their sites – a major stumbling block for Google I imagine. But buying the market leading adserving solution should fix that. And by migrating to Dart for its conversion tracking, Google could in theory place a significant dent in the affiliate industry overnight.
Let’s look at a better alternative. There has been a lot of talk online about a Microsoft / Yahoo! acquisition, which would finally give Google some competition. An acquisition here would bring valuable technology such as Yahoo! Talk to Microsoft and would relieve some of the dominance Google has in online advertising revenue and web-based services. Unfortunately, to-date, this is only speculation.
In the coming months, Google’s next steps should be closely monitored. This acquisition does not only impact the affiliate industry - technology could also be at risk. If Google offers tracking solutions as a value added service to its “adwords”, there will be no charge for clients to use the software.
Such developments make me question how much of a business model remains for the adserving sector. If Google offers Dart, for free, to its existing clients - an estimated 60% market share – we might as well all close down and head to the pub.
We should be prepared for an imposing behavioural targeting model if Google starts serving inventory into its Adsense placements. And if BFP is withdrawn, as I’m sure many agencies suspect, we will be left with a monopoly media owner with a major share of the search market, a significant share of the display market, determined to operate a model totally geared towards a client direct trading relationship. Google could revolutionise advertising relationships, in a way that even Rupert Murdoch has not contemplated offline.
The potential implications of the DoubleClick acquisition should not be underestimated. Google is going to have to pull off a masterstroke in its execution to achieve full potential.
We can only hope the competition commissions, to who this case has been referred, will do us justice. Otherwise, for the first time, the future of affiliate marketing could be in the hands of Microsoft.
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