Yesterday was more than just another day in search marketing paradise. One big kid from the search and affiliate marketing block met another big kid from the online ad space neighborhood and bam! A search marketing powerhouse was born when online ad solution tools met search engine marketing tools.
In my interview with DoubleClick's chief executive officer, (the other) Kevin Ryan last month, we talked about whether DoubleClick would build or buy, and about the world of search.
Well, the announcement came yesterday that DoubleClick (NASDAQ: DCLK) will enhance their existing online marketing ad solution, DART for Advertisers, with a product to be called DART Search -- created via buying Performics, the performance marketing firm.
Let's take a look at the nuts and bolts of the deal, along with what this means for search as we know it.
Dollars, sense and integration
While the transaction is still subject to anti-trust clearances, the agreement represents an all-cash deal totaling $58 million, plus an earn-out of up to $7 million, for a potential total of $65 million, according to yesterday's press release. As the story goes, many of DoubleClick's clients were also clients of Performics, so the marriage of the two firms would seem to be an easy decision.
"Ad management clients have encouraged us get into the space for quite some time," Ryan says. "After talking to quite a few players in the business, as well as our Abacus customer advisory group members, a number of them already used Performics and we heard great things about them."
The acquisition promise indicates Performics will provide the infrastructure for DART Search in a very efficient format, linking online marketing reporting with affiliate initiatives and paid search components. In other words, you get the whole ball of wax in one interface.
According to (the other) Ryan, the integration roll out will be two fold.
"Performics is already one of the leaders in performance marketing and very strong in the retail category space with key client relationships. Integration with DART for Advertisers with keyword management will happen very quickly with unified reporting," he says. "Multiple components of integration will follow over the course of the next six months, with analytics and much more."
The advert solution war
Aquantive, Inc. (Avenue A, Atlas DMT) purchased GoToast to have an integrated search offering. Advertising.com is also into search. What's going to happen to an ad serving firm that does not offer a search management component?
While the trend may be consolidation in ad serving and bid management, another marketing technology provider in the space, Blue Streak, has no bid management tool per se. But they are offering a new solution called Ion View, which allows synchronization of search data sets.
"Whether it's pay per click or paid inclusion we want our clients to be able to distinguish which channel originated a sale," says Eric Picard, Blue Streak's director of product marketing.
Clearly, if one wants to play in the ad solutions space, one will have to offer some level of search consideration -- but this purchase is bound to affect other areas of the search space as well.
Search engine specialist impact
So what does today's announcement mean for SEM shops? Could it be the end of small boutiques who offer pay-per-click and consultative services in the media cost plus fee model? How about SEO specialists? Will they eventually be forced to abandon paid search services to focus on the more complicated organic or natural optimization?
"This acquisition is going to set the space on fire," says Frederick Marckini, chief executive officer of iProspect, a large search engine marketing firm. "This is a battle heating up between ad solutions firms within the pay-per-click space -- not necessarily organic search space. And pay-per click search [marketing] is too difficult to accomplish successfully without a human component."
"This is good news for search-specific shops, especially those that can provide a full search solution, including both the paid elements now provided by Double Click, and natural search," says Jeff Herzog, chief executive officer of full-service SEM firm icrossing. "SEM providers that can integrate both of these will continue to win business, even against a huge player like that."
Couldn't have said it better myself, Frederick. Wait, I think I did. I have another question then. What will happen if said search firm competes with Performics and doesn't want to fund them by using DART Search?
It wasn't too long ago a certain agency holding company I know purchased another holding company, and competing big-brand clients proceeded to walk out the door -- to the tune of seven or eight-figure billings. The search component combined with ad serving in one package raises an age-old question. How much consolidation is too much? While this is definitely not a merger of two ad giants, there are some parallels here, and according to DoubleClick, the Performics brand will remain alongside DART Search.
"This acquisition definitely validates search engine marketing, although I think it could potentially open a Pandora's box for Performics," says Kevin Lee, chief executive officer of New York-based search marketing solutions provider Did-It.com. "In the past, we have heard of agencies refusing to consider Atlas technology because of the Avenue A relationship. I withhold final judgment, but it definitely raises some interesting possibilities."
Of course, there is also the sleeping Google giant in this picture. Google now offers banners in the AdSense program, along with an email solution. One has to ask if Google will be perceived as a competitor in the space.
"While there might be some areas on the ad serving side, we anticipate only small areas of overlap" says (the other) Ryan. "We view Google as more of a partner than competitor at this point."
The search saga continues
Don't get me started on shareholder equity and the effect of unrestricted scrutiny on a new product launch or a private company going public. In the end, an increasingly competitive marketplace will demand a very high-quality product from both Performics and DoubleClick, but given their leadership qualities and respective positions in the marketplace, I will expect nothing less than excellence from these two firms.
About the Author: iMedia search columnist Kevin Ryan's current and former client roster reads like a "who's who" in big brands: Rolex Watch, USA, State Farm Insurance, Farmers Insurance, Minolta Corporation, Samsung Electronics America, Toyota Motor Sales, USA, Panasonic Services, and the Hilton Hotels brands, to name a few. Ryan believes in sound guidance, creative thought, accountable actions and collaborative execution as applied to search, or any form of marketing. His principled approach and staunch commitment to the industry have made him one of the most sought after personalities in online marketing. Ryan volunteers his time with the Interactive Advertising Bureau, Search Engine Marketing Professional Organization and several regional non-profit organizations. Meet Kevin Ryan at Ad:Tech May 24-26th, 2004