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Gather round folks, let's start a thread about the possibility that the government would force Google to divest DoubleClick. 1/x
2/x Business Insider ran this great article touching on some of the issues: businessinsider.com/marketers-weig… I'm quoted saying "it would be an epic change similar to when AT&T was broken up"
3/x For those of you who are new around here, Google acquired DoubleClick for $3.1 billion about ten years ago. DoubleClick products are both on the buy-side and sell-side of advertising and in some sectors have near monopoly positions.
4/x Let's start with the question of why they might be forced to sell it and how they might have abused their monopoly power. Some examples...
5/x On the publisher side, Google used the huge market penetration of DFP to give themselves preferential ability to buy ad inventory using AdSense or AdX. Until the rise of header bidding disrupted this they took full advantage.
6/x On the advertiser side, Google only allows its own bidder, DoubleClick Bid Manager, to access YouTube inventory, which puts that product in a huge competitive position vs everyone else in the market.
7/x Google has also deeply integrated Google Analytics into the DoubleClick stack to provide marketers with insights they can't get from third parties. This is especially true because they are very strict about the ability of other analytics vendors to operate in YouTube etc.
8/x They also have been extremely aggressive on the commercial side by giving advertisers "credits" based on their cross-product usage of the Google stack. This cross-subsidizing of products makes it very difficult for competition to gain ground.
9/x So what would a break-up look like? Let's start on the tech side. In a word it would be PAINFUL.
10/x All the DoubleClick products have been migrated to the Google "stack". This stack is proprietary and much of it would need to be replaced or reproduced if spun off into a separate company.
11/x This isn't simple at all as the products are both high scale (millions/sec) and high scope/complexity. To my knowledge Google has never spun out any technology previously and there wouldn't be a blueprint for this.
12/x On the product side, it is hard to even identify where "DoubleClick" ends and "Google" starts. The sell side products DFP, AdSense, and AdX are deeply tied together at this point.
13/x The products all use the same tags on the publisher sites, so would every pub in the world need to retag (!!) or there would need to be some kind of inter-operability tech, which sounds hairy.
14/x The buy side would also need to retag as DoubleClick and Google Analytics all use the same tag manager and code. This would be a nightmare for advertisers.
15/x Did I mention they all share the same cookie spaces? OMG.
16/x What about the business side? What would actually happen to a spun-off DoubleClick and what would it be worth?
17/x Round numbers. DFP alone is a $500 million SaaS business. The buy-side SaaS is probably $250-300. As a comparison, Salesforce does about $3 billion in revenue.
18/x The SaaS business doesn't include media. Google owns DoubleClick is so it can buy and sell the ads that go through it. AdX is dependent on DFP and is a huge media business, an order of magnitude larger than Rubicon ($350MM market cap) or AppNexus ($1.6 billion)
19/x The buy-side media business, DoubleClick Bid Manager, handles maybe 3-4x as much media as The Trade Desk ($20 billion market cap!) so that's not insignificant...
20/x So a spun-out publicly traded DoubleClick could be worth many tens of billions of dollars. But what would it look like?
21/x On the sell-side, the independent DoubleClick would certainly offer an ad exchange product and given the integration with all the large publishers it would be a very attractive business. It would likely be much more vulnerable to competition from AppNexus, FreeWheel, etc.
22/x On the buy-side it really isn't clear what would happen. The two biggest advantages DoubleClick Bid Manager has is the exclusive YouTube inventory and the exclusive Google data, and both would go away. You're left with a mediocre DSP. :)
23/23 In sum, we live in exciting times. If anyone wants to sell me DoubleClick I'll scrape up some change and promise to definitely bring back the "Empowering Originals" marketing campaign. Fin.
