Google to Buy DoubleClick

NEW YORK Google reached an agreement with private equity firm Hellman & Friedman to buy DoubleClick for $3.1 billion in cash, the largest acquisition yet made by the Internet giant.

The addition of DoubleClick, which provides the technology to place ads on Web sites, could help Google control even more of the Internet advertising market, particularly in attracting brand ad dollars. DoubleClick has already announced plans to create an online advertising exchange that would let marketers bid for ad space on Web sites.

“This transaction will strengthen our advertising network by expanding our access to publisher inventory and enabling us to serve the needs of a broader set of advertisers and ad agencies,” said Tim Armstrong, Google’s president of advertising, in a statement.

The pending acquisition is another blow to Microsoft, which was reportedly in talks to buy DoubleClick for $2 billion. It is also an enormous bet by Google that DoubleClick’s ad-serving technology will help the company expand beyond its dominance of search and text-based Web ads into display ads favored by brand marketers.

While Google generated $10.5 billion in 2006 ad revenue, nearly all of its sales come from text listings on search results pages and elsewhere. Google’s efforts to translate its search dominance into a leading position in display and video markets have so far been mostly unsuccessful.

“It gives Google access to the display ad market which they didn’t have before,” said Charlene Li, an analyst at Forrester Research. “This is an opportunity to buy straight into it. It would have taken them years to get into the marketplace.”

The data going through Google could, however, give some publishers pause.

“Google is going to have to be very thoughtful [about] how they take advantage of this installed base they have,” said Bill Gossman, CEO of Revenue Science, a behavioral targeting firm in Seattle. “Publishers want to be very sure of what’s going where—and how it’s protected.”