4A's, ANA Weigh in on Google-DoubleClick, Online Ad Deals

Urge FTC, Justice Department to Apply 'Careful' Scrutiny

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NEW YORK (AdAge.com) -- Two major advertising-industry associations have written a joint letter to the Federal Trade Commission and Department of Justice, urging them to take a "careful, wide-ranging and comprehensive perspective" and evaluate the recent mergers-and-acquisitions activity in the online-advertising space.
Bob Liodice

Bob Liodice

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The letter from the American Association of Advertising Agencies and the Association of National Advertisers preceded last Friday's request by the FTC for additional information from Google and DoubleClick about their proposed deal.

"During the past month, there have been several major acquisition announcements in the online advertising marketplace," the joint letter said. "These mergers, if approved, certainly would change the online advertising marketplace. As such, those proposed combinations deserve careful scrutiny. It is essential to ensure that none of these combinations restrict competition in the internet advertising marketplace."

It continued: "Advertising on the internet is one of the fastest-growing sectors of marketplace promotion; therefore, ensuring its competitiveness is critical for all participants."

IAB not involved
The Internet Advertising Bureau was not involved in the sending of the letter and doesn't comment on members' business-development initiatives. "We believe that there are appropriate regulatory and legislative venues for these discussions and debates to take place, and we're happy to have them take up those discussions and debates," IAB CEO Randall Rothenberg said in an e-mail to Advertising Age earlier this month.

The purpose of the letter was not to suggest concern over deals, said ANA CEO Bob Liodice, but rather to implore regulators to take a close look at all the deals.

"It's not just Google-DoubleClick," Mr. Liodice said. "We looked at the whole portfolio of acquisitions and said the whole thing is moving very, very quickly. We don't have the ability to understand the implications. ... We asked in a very neutral kind of way to say, 'would you please take a look?'"

Since Google's April 13 decision to acquire DoubleClick for $3.1 billion, there have been several other acquisitions: Yahoo announced its intent to buy out the remaining 80% share of online advertising firm Right Media for $680 million; WPP Group announced a planned acquisition of online advertising company 24/7 Real Media for $649 million; and Microsoft announced a planned acquisition of aQuantive, which owns Atlas, Drive PM and Avenue A/ Razorfish, for $6 billion.

Defining the market
One of the biggest hurdles for the FTC in evaluating the deals will be to define what markets the companies are in exactly. Is it online, third-party display advertising? Or should the market be broadly defined as advertising?

For Google and DoubleClick, the process is under way: Shortly after Google announced the acquisition, it filed what is called a Hart Scott Rodino notice with the FTC and Justice Department, a required and fairly basic notice. The FTC and Justice Department then decide if they will investigate and, if so, which agency will handle the case.

The FTC on May 25 -- 30 days after the Hart Scott Rodino notice -- issued a second request for more detailed information from Google and DoubleClick about their businesses. It may also ask specific questions of the companies and is generally a closed, private request. Google confirmed receipt of the second request and said it would comply.

Thirty days to act
Once Google responds, the FTC will have another 30 days to make a decision on the deal, either approving it, approving it with conditions or block it outright.

Don Harrison, senior corporate counsel for Google, in a statement said: "We are confident that upon further review the FTC will conclude that this acquisition poses no risk to competition and should be approved. Numerous independent analysts and academics have determined after looking at this acquisition that the online advertising industry is a dynamic and evolving space -- as evidenced by a number of recently announced acquisitions -- and that rich competition in this industry will bring more relevant ads to consumers and more choices for advertisers and website publishers."
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