News sources everywhere have confirmed that Google has agreed to acquire Doubleclick for $3.1 BILLION in Cash. Doubleclick is the parent company of the third largest traditional affiliate marketing network: Performics.

I’m a bit taken back by this acquisition…not because I didn’t believe it could happen (especially since there have been rumors for weeks that Microsoft was in talks to acquire Doubleclick) but because Google is now the owner of the third largest affiliate marketing network in the United States….not to mention one of the most sophisticated and widely used ad serving platforms.

A bit more ironic about the acquisition is that I had the pleasure of sitting on a panel on Thursday of this week (two days ago) at Search-Engine Strategies (SES) – New York (Dealing with Affiliates panel) with my friend Chris Henger who is Vice-President of Affiliate Marketing at Performics – during Chris’ introduction I grabbed the microphone just as Chris said “VP of Affiliate Marketing at Performics” and said jokingly, “a Microsoft Company.” I definitely got some laughs from the audience, but Chris quickly corrected me by saying…”no, we are a Doubleclick Company.” Little did I know that Google would announce the buyout about 24-hours later (my guess is that Chris knew, which probably explains the funny look he gave me, which included a bright white, full teeth smile).

Back to the buyout. According to the New York Times Google paid ($3.1 Billion) about 10X Doubleclick’s revenues ($300 million). That is a very healthy multiple – other blogs have suggested Google was willing to pay a bit more since Microsoft was also pushing to make the acquisition. While I agree that that likely influenced the final number the truth is that the Doubleclick / Performics buyout was the most strategic move Google could have made to immediately enter both the affiliate marketing and broad display ad serving marketplace (not to mention the SEM management business.)

FYI: Performics is the largest SEM management agency in the United States.

NOTE TO GOOGLE: Good luck creating a Chinese Wall between your ad serving business (Adwords / Adsense, etc.) and your management business (Performics) – that has conflict of interest and Congressional hearings written all over it.

I’m quite concerned about what this buyout means to the broader affiliate marketing industry. For instance, I honestly believe that the buyout represents a serious depreciation in value of Commission Junction and Linkshare and this means an eventual disproportionate control of the affiliate marketing industry – CJ and Linkshare will become irrelevant within 24 months unless they are acquired by Yahoo or Microsoft or IAC/InterActiveCorp (Fox).

Google will ultimately (within a few months) integrate all media holdings into something like “Google Media Solutions,” which will provide advertisers incredible value and efficiency – this will ultimately mean that merchants from Commission Junction and Linkshare will move to the Google Affiliate Network because of the cost benefits and efficiencies of doing so.

This is unfortunate because I don’t believe Google treats all advertisers fairly, especially as it relates to providing preferencial treatment to its largest advertisers (i.e., EBAY, Amazon, Shopping.com, etc.). In many cases, Google’s rules do not apply to their largest advertisers, which is unfair and diminishes the value Google provides to smaller and medium sized advertisers.

The internet is supposed to be the equalizer and Google its shepard – the revolution that provides business opportunities to kids with computers and like-minded entrepreneurs with a dream. I don’t believe the internet should be a platform for a company like Google to rule the world. I’m not naysaying the power Google provides us all to live our life more efficiently; however, I’m less interested during my lifetime in witnessing the creation of the most disgustingly POWERFUL and PROFITABLE company…I mean government…ever known, especially if that event jeopardizes the essence of what the internet should represent.

My guess is that we will see some additional buyouts of similar companies in the near future. I wouldn’t be surprised if we hear a Microsoft…Vauleclick buyout announced in the coming weeks. If Microsoft doesn’t do something soon they will become irrelevant as anything more than an old software company. Microsoft should take Google’s lead and purchase Yahoo and follow that up with an acquisition of Valueclick – once this happens (or something similar), which it will, things will get even more interesting (sad).

This entry was posted on Saturday, April 14th, 2007 at 12:41 pm and is filed under affiliate marketing, internet marketing, search-engine marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.