Microsoft, Google, and Others Dueling Over DoubleClick?
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The rumors first surfaced in the Wall Street Journal, and then spread like wildfire. All of a sudden it looks as if everyone is interested in DoubleClick. Why? All of the proposed suitors seem to have different reasons.
Let’s start by looking at the bride-to-be. DoubleClick is no spring chicken in Internet years; it was founded in 1996. It grew through the 1990s and became practically a household name in online advertising. That was before the dot-com bubble burst, and online ads took a beating. More recently, private equity investors Hellman and Friedman LLC and JMI Equity purchased DoubleClick for $1.1 billion in July 2005. That purchase led to a turnaround of sorts, making the company a lot more attractive.
DoubleClick is now much leaner. It sold off its email marketing service for $90 million. Just a few months ago, it agreed to sell its Abacus data management and analytical unit. Alliance Data Systems, the lucky purchaser, agreed to pony up $435 million for the unit. What is left is a company that is tightly focused on advertising, that Computerworld describes as “one of the largest ad networks in the United States.”
And what a network it is. Clients can choose from services such as ad management, ad serving, behavioral targeting, and online video. Its Performics division provides online marketing services and technologies for multi-channel partners. DoubleClick also went after the competition, in some cases by buying it. For example, last year it bought Falk, a rival ad serving firm located in Europe.
Its revenues are nothing to sneeze at. The Wall Street Journal quoted “a person familiar with the matter” as saying that DoubleClick had roughly $150 million in revenue last year, with more than two thirds of that coming from serving ads for publishers and delivering them on behalf of advertisers. On the other hand, the New York Times declared that DoubleClick’s revenue in 2006 was about $300 million, but did not cite a source.
Aside from its traditional advertising business serving publishers and advertisers, DoubleClick owns two other items that might be of interest to potential acquiring companies. One is its small but significant library of patents. The other is the new auction-based service it rolled out. I’ll discuss both of those in a bit. Right now, it’s time to meet the potential grooms.
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