Google - DoubleClick Acquisition discussion

Tuesday, 02 October 2007

Even without the DoubleClick acquisition, according to Game Theory and Auction Theory, the Adword bidding arena is about to get into another gear as tools such as SpyFu, Compete, and Alexa making the keyword bidding process, and other SEO and SEM processes transparent. Like English auctions where prices are revealed, as the number of bidders get larger, the bids approaches the market price. Auctions or bidding are used because sellers don't know the real value of the goods - prices change depending on market conditions - prices are what buyers willing to pay. In the web avertising arena, when there are a small number of bidders for top positions, the sellers (Google, Yahoo, Ask, etc...) always get better than market prices. - which is the current state of Adwords. Imagine if Adwords used the Dutch auction where bids are offered as Google drops the Ad prices, or First-Price/Sealed Bid auctions where bids are offered to highest bidder at certain time of the day. Let's not jump into that just yet. With the Acquisition of DoubleClick, what will change? Currently DoubleClick DART helps advertisers with buying ad spaces and helps publishers minimize unsold space inventory. DoubleClick does a number of housekeeping processes on top of ad serving. How will these processes changed? The bottom line (search engines') will drive the changes. What about another model, namely ISEDN.org where there is a flat fee for keywords and fair rotation of advertisement among all buyers. It certainly will eliminate click frauds, but is it realistic? For some industries, non profit, and public services, it might work well. The traffic report on Alexa for ISEDN.org shows that the idea is not catching on - traffic steadily declines with only a few exeptions. Read Google's views on government, policy, and politics