Google to Buy DoubleClick for $3.1 Billion

Two weeks of rumor and speculation that have reverberated through the interactive marketing industry were concluded today with the announcement that Google will buy DoubleClick for $3.1 billion.

The acquisition, the biggest in Google’s history, heralds a huge consolidation of power in the online marketing industry, combining the largest search engine with an original and still biggest ad management firm.

“DoubleClick’s technology is widely adopted by leading advertisers, publishers and agencies, and the combination of the two companies will accelerate the adoption of Google’s innovative advances in display advertising,” said Eric Schmidt, Chief Executive Officer of Google in a company statement.

Google’s share of the search market is over 60 percent, and the company has staked its future growth on building an ad network across online and offline media. One of the main factors hindering that growth has been the company’s unwillingness to work with third party ad servers. Its acquisition of DoubleClick will do away with that concern, as advertiser trafficking and reporting for campaigns on and off its AdSense network will be available via a single interface.

It’s been 21 months since investment firm Hellman & Friedman acquired DoubleClick for $1.1 billion. Since then it has sold off the company’s e-mail and data businesses, streamlining it as an online ad specialist. The company is reported to have greatly increased its profit margins in the intervening months.

Late last month, The Wall Street Journal reported that DoubleClick was in talks with Microsoft about a possible acquisition. Shortly after the same publication reported Google was involved in the bidding, and DoubleClick announced it was creating an online ad exchange, marking a return to the business of connecting advertisers and publishers, something DoubleClick abandoned years ago during the digital bust.

The deal will have major implications for nearly every ad network and ad management platform. The new exchange could compete with existing ad networks for Web traffic, since DoubleClick has established relationships with thousands of sites accounting for large swaths of the available online inventory. Google said it would leverage DoubleClick’s publisher relationships to expand its access to online inventory and grow its ad network.

The deal is not without risks for Google and DoubleClick. Some site owners will certainly be uncomfortable with Google’s newly won access to data about their traffic and online ad campaigns.

Neither Google nor DoubleClick could be immediately reached for comment.