Google has a few challenges ahead of it. On the one hand, if it wants to maintain its stellar share price, it needs to continue growing at around the same rate it has in the past (as investors have certainly factored revenue growth into the share price). On the other hand, it is already the dominant search player, and while the search market has room to grow, it clearly won’t grow at the rates needed.
So Google had to find a new ‘bucket of money’ to tap – enter DoubleClick, best known for its ad-management technology, with an extensive list of global clients.
The key to understanding the deal is recognising how each company brings different strengths to the table.
Google is simply the best operator in the text-based advertising space. DoubleClick is a behemoth in the banner ad (and, more recently, rich media) space. Google is virtually absent from the banner + rich media ad markets, so the acquisition positions it to take a commanding lead in this catergory (which comprises ~30% of online advertising revenues).
But there appears to be an elephant in the middle of the room here.
Google has undoubtedly an engineering-dominated culture, and it certainly believes in the power of data crunching algorithms. Its sheer excellence in being able to ‘interpret’ data – in terms of web content, search queries and the implications of click streams – has put it into a league of its own.
But there is a limit to what data alone can tell you. While algorithms are perfect (well, demonstrably logical), humans are not. Semantic and ontological analysis of information content and search queries doesn’t always give you the full pictue (we humans often lack the cognitive power to accurately state what it is we want, and we tend to get distracted a lot).
This is why there has been significant investment in ‘behavioural search’ in recent years – the idea that you need to take cues from actual human behaviour (i.e. behavioural context) to supplement the data content of search queries and the like, in order to gain a true understanding of an individuals’ intent.
In buying DoubleClick, Google has stayed very close to what it knows – ad-management (placement, categorising, ranking etc.) is all about running hyper-efficient algorithms anchored upon a structured data framework. But the true opportunity for Google may be to look a little further afield, and recognise that it may have (or be creating) an Achilles’ heel in failing to create a behavioural toolset to augment its already formidable algorithmic armoury.