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April 13, 2007

DoubleClick: What's the big deal?

Posted by Kim Peterson at 2:47 PM

Google is buying online advertising giant DoubleClick for $3.1 billion in cash.

Why is DoubleClick worth so much to Google?

DoubleClick is huge in the online advertising business. It works directly with ad agencies to buy up online advertising space and measures how many clicks an ad gets. It also works with the publishers, the Web sites that own all of this valuable space.

DoubleClick is setting up a stock market-like exchange for those buyers and sellers to get together. There, they can run auctions for advertising space, and DoubleClick gets a cut of each transaction. The idea is that the exchange will help Web sites sell space that would otherwise be undervalued or unused.

The company has huge customers, including Ford Motor, MySpace and AOL.

DoubleClick has been in hot water for some of its practices. The Federal Trade Commission began investigating the company in 2000 after DoubleClick said it was going to begin using personally identifiable information gleaned from its new subsidiary, market researcher Abacus Direct. DoubleClick backed off and eventually sold Abacus.

Microsoft was reportedly also going after DoubleClick. I've asked the company for reaction to the sale and will update with its response.

Update: After first saying Microsoft would have a statement, a company spokesman e-mailed me this afternoon to say a statement will not be issued at this time.

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