Google has agreed to buy DoubleClick for $3.1 billion in cash, an acquisition that strengthens Google's status as an online advertising powerhouse.

DoubleClick's network of advertisers and Web publishers, as well as its technology to serve ads and manage campaigns, is expected to boost Google's ad business, specifically for display and rich media advertising, which aren't Google's specialties.

Google generates most of its revenue from search engine, pay-per-click advertising, which are text ads that link to advertisers' Web sites, but it has lagged behind Yahoo and others in banner, graphical and video ads.

Google is buying DoubleClick from private equity firm Hellman & Friedman and JMI Equity and management. The deal is expected to close by the end of the year.

"By working together, we're going to be able to offer a variety of tools for advertisers to do better Internet targeting," said Susan Wojcicki, a vice president of product management with Google, speaking on a conference call with reporters. "Advertisers will be able to spend more and be able to make rational decisions about how they are spending their ad dollars."

The fact that there is such an "obvious alignment" between Google and DoubleClick advertising partners was an impetus for the deal, said Google CEO Eric Schmidt. "DoubleClick has been a partner of ours for a very long time, and some of the most important advertising partners of Google are in fact very big DoubleClick users," he said.

Google officials spoke only generally about product plans. "It's not good for us to speculate right now on what we might do," Schmidt said. "This merger is really part of a global growth strategy for Google. It's a way of solving, in an end-to-end way, problems in search and display advertising."

Recent rumors had Microsoft aiming to buy DoubleClick for about $2 billion, so Friday's announcement signals that a bidding war had erupted with Google, said industry analyst Greg Sterling of Sterling Market Intelligence.

The deal is a clear loss for Microsoft and it stands to affect Yahoo as well, because with DoubleClick, Google gets a much-needed boost in display advertising, Sterling said.

Companies such as DoubleClick that link advertisers and Web publishers have thrived in recent years, thanks to the strong growth in online ad spending, said Clayton Moran, a financial analyst with Stanford Group Company, in Boca Raton, Fla., prior to Friday's announcement.

The IDG News Service is a Network World affiliate.

Whitepapers

• Selecting Effective Virtual Directories
• Best Practices for HP Servers and HP Enterprise Virtual Array in a Microsoft Exchange
• Compliance, Protection, Recovery: A Layered Approach to Laptop Security
• Endpoint Security: Data Protection for IT, Freedom for Laptop Users
• IT Departments on Data Security: A Research Concepts Survey
• Laptop Security Tool Helps Allina Hospitals Track 97% of IT Assets

View more SOFTWARE whitepapers

Webcasts

• Managing the End User Experience-A Real World Example of Success
• Lowering the Cost of Email Archives
• Google Webcast: Why archive email? Top challenges and best practices
• High Availability for SQL Server 2005 Using Array-Based Replication and Host-Based Mirroring Technologies
• Technical Overview of Exchange Server 2007 with HP Servers and Storage
• Bringing Order and Security to your Mobile Workforce: Corporate Mobility Policy and Device Management On-Demand

View more SOFTWARE webcasts

Special Reports

• Application Performance Management Executive Guide
• Executive Guide: Building a Service Oriented Architecture
• IT Buyers Guide To: Collaboration

View more SOFTWARE special reports