After getting approval from the European Union for its DoubleClick acquisition this week, Google promptly closed the deal and said it is eager to absorb the digital marketing company's technology and services -- and who can blame Google for its urgency?
It has been almost a year since Google announced its intention to buy DoubleClick for US$3.1 billion, and the consummation of the deal comes at a time when Google is displaying rare signs of vulnerability.
The search giant slightly missed earnings expectations for its fourth quarter -- a notable misstep for a company that typically crushes analyst forecasts -- and its stock is off more than US$300 from its 52-week high.
Meanwhile, as it stares at the possibility of a stronger competitor if Microsoft buys Yahoo, Google has been busy trying to put a positive spin on a comScore report that highlighted Google's Achilles heel: its overwhelming dependence on pay-per-click (PPC) text ads.
These ads, delivered along with Google search results and in third-party sites in its ad network, make up most of Google's revenue. That's why comScore's report, which said Google's paid clicks had suffered a 7 percent decline in January compared with December, scared the living daylights out of Google investors.
Google has tried to do damage control by saying that the decrease in paid clicks was due, in large part, to Google's success in improving the quality of its ad delivery, meaning that with more precise targeting, users have to click on fewer ads. Still, Google's stock is down almost US$70 since that report came out.
There have been other unwelcome metrics for Google recently. IDC reported that Google's share of the US Internet advertising market dropped slightly in 2007 from the year before. Although hardly catastrophic, reports like that are nonetheless uncharacteristic for Google and raise eyebrows when measured against its stellar performance over the past five years.
Adding to the sense of urgency is that, while Google was waiting patiently for the DoubleClick acquisition to clear regulatory hurdles, competitors like Yahoo, Microsoft and AOL were busy snapping up digital marketing companies and beefing up their capabilities to take advantage of the growing online ad market.