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With a purchase price of more than $3b a little regulatory scrutiny was to be expected for the pending DoubleClick and Google deal.  Yesterday the New York Times confirmed such scrutiny was ongoing, and official.  According to the article, the Federal Trade Commission (instead of the Justice Department) was conducting a review and had issued Google a Second Request which is a formal request for answers to a list of detailed questions.

The news or review, regardless of which agency administered it, was expected.  Google stated back in April when the deal was announced that they’d studied the anti-trust issues, expected regulatory scrutiny, and weren’t concerned. 

Given the stakes for the acquisition are high, and also the fact that, in this transaction, you have two companies coming together that each handle a tremendous volume of consumer behavior related information, a Second Request and a detailed review is not a shocker.

DoubleClick, which provides display advertising (video or graphic banners), displays its advertising across a wide range of independent web properties and through “cookies” has the capacity to track which sites a web surfer has visited. Google, in contrast, as the leading search engine, has the capacity to track what web searchers users have made. Google reportedly keeps that date for up to several years as well.  A combined company could pool this information and theoretically that could be problematic, so it warrants a check-up.

Realistically, however much privacy concerns irk and scare consumer watch groups, privacy concerns are not likely to do more than stimulate debate.  Both sites have clear privacy policies and neither is doing anything outside industry practice. Click to Read More

In the beginning of May, YouTube (which has become the 4th most visited website on the planet according to Alexa Ratings) announced it was going to begin sharing ad revenue with its more popular, and prolific contributing members.  Specific terms weren’t disclosed, and the only thing clear was that (unlike competing site Revver) the revenue sharing would be selective and not available to the majority of contributors.

I looked more closely at that revenue sharing situation on May 8th and I wrote an article (available here) speculating that, as announced, the revenue sharing program was really just a small step in  Google/YouTube’s grander plan for video advertising.  It was my theory that Google was simply taking a measured step towards a much larger ambition to serve a more complete video advertising solution (both in the video stream, and also, with contextually appropriate ads wrapped around it).  At the time, I wrote “I would not be surprised it YouTube, flush with Google’s cash and infrastructure to assist it, isn’t working on trying to innovate in-video advertising the same way that Google did with search.  I’d see the limited revenue sharing arrangement as just a small step toward that goal.”

It’s only been a few weeks, but things happen fast in the technology world, and it’s looking more and more like my tea leaves were correct that day.  As of today, Google is running a limited test to allow a small group of advertising partners to run video ads inside of video clips (e.g. In-Stream or In-Video advertising). 

The test is being run as part of the AdSense program and revenue will be split (as is the case with other AdSense ads) between the website publisher and Google.  The ads will be no longer than 30 seconds and can be skipped by the viewer.  For now, the pilot program ads will run on web publishers embedded Flash players and not inside Google or YouTube hosted videos (though, if the pilot is successful, that will almost assuredly change).

If the pilot program does evolve to include YouTube as is expected, it’s also pretty likely that the ads will be highly targeted. In late April, in a story published by Adage.com, YouTube’s Chief Marketing Officer, Suzie Reider confirmed that YouTube was using the site as a focus group and collecting an enormous amount of data about the use of video content. Quoted in the article, Ms. Reider said “By Q3 [YouTube will] have a tremendous amount of metrics and data around every video.”

This Adsense Video pilot program is just the kind of innovation that could make Google’s purchase of DoubleClick start to look like a very smart move. Click to Read More

All week, rumors have been floating around that Web 2.0 company Feedburner, which helps websites and blogs (including Metue) distribute and track RSS (Really Simple Syndication feeds), is being bought by Google.

A short while ago, Tech Crunch ran a story citing sources close to the deal saying the deal was in fact official with an announcement due shortly.  According to the Tech Crunch article, the parties have signed a binding term sheet and are working through the deal documents.    If that’s accurate, and my research also seems to suggest it is, a closing within the next month is likely.

The deal is reported to be for about $100m in cash, with that paid largely upfront.  For Feedburner and its investors, this will mean a nearly 10x return on investment over the 4 year life of the company. 

For Google, Feedburner and its platform could represent a new frontier in advertising, especially for Google’s AdSense platform.  The logic is that:  when people view news (and blog) content through RSS or email feeds (both of which are increasingly popular) they often do not click-thru to the original article and publishing website. Consequence of that, a large number of advertising impressions are potentially lost for the host site (and it’s ad publisher which is often Google).   In buying Feedburner, Google gains the ability to place advertising directly in to the feed-streams.  With that, Google will be able to take it’s AdSense platform and make it more mobile.  Impressions potentially lost to feeds can be recaptured.  That’s a positive opportunity for Google and blog/website publishers alike.

If your pockets are deep enough you can afford to pay to find good content.  At least that would seem to be the case for IPTV company Joost.  Just a few weeks after closing a substantial $45m Series A financing (that bought investors around the world only a minority stake), Joost has now signed a deal with Creative Artists Agency.

The LA-based talent agency will, according to a statement from the company’s head of business development, Michael Yanover (reported by Reuters), "provide Joost greater access to programming through [CAA’s] relationships with networks, studios, record labels, artists and independently-controlled content libraries."

With strategic investment from CBS and Viacom (more here), you’d think Joost already had access to significant media relationships and networks – but I suppose the more leads the better; so long as you can afford it or the price isn’t too steep.  (It’s not clear what Joost paid for the privilege)

One thing is clear – Joost is trying hard to capitalize on all the press and publicity it can. For most startup’s, or aspiring actors, getting an agent may be a big deal but in and of itself, it’s not newsworthy. Joost seems to have a knack for getting themselves in the press (a feat, it’s founders also accomplished well with their past startup, Skype). Given the publicity, I’m surprised their competitor Veoh (which is backed in part by Hollywood notable Michael Eisner) hasn’t tried to steal, or share, in the limelight.

Whatever money Joost is spending, I hope they allocate a more sizable amount toward the quality of their service. I’ve experimented with Joost a good bit this past week and I’m not yet impressed. I know it is still a beta (and am therefore withholding final judgment), but the reality doesn’t yet live up to the hype (and the hype seems to be getting bigger day by day!). Right now, its like watching an amateur baseball player with a good swing and talking about him playing in Major League Baseball and being a superstar. The guy may or may not have the talent, but he’s not in the bigs yet, and a lot needs to happen for him to get there– I’m not a big enough baseball fan to want to watch the amateur games.

[Note: Joost is still invitation only.  As previously noted, if you’d like an invitation to try the service send an email from the Contact Page here on Metue or leave a comment and put Joost Invite as the title, or the subject.  I’ll be happy to pass one along, no strings attached (though I'd welcome any emails of people's thoughts on the Joost experience for inclusion in a future article).]

Around May 13, New York based blog Jossip began running with a story that small video-blog/news site Wallstrip was being acquired by CBS.  Information regarding the deal at the time was credible enough to suggest it was highly likely the rumors were dancing around truth, so  I ran with the story here on Metue as well.

Now, a week and a half later, the New York Times has confirmed what many of us already knew: the deal did happen.  While terms weren’t disclosed, CBS did announce the deal and said that Wallstrip would retain its identity.   CBS will work with the creators of Wallstrip to develop Internet programs and information for mobile phones and portable devices.

The Wallstrip content will be added to the portfolio of materials being  produced by CBS’s interactive unit which is actively pursuing an online strategy that includes original content and syndication to web properties including,  AOL, YouTube, and likely, IPTV startup Joost which CBS recently invested in.

The announcement of the deal did not mention specifics regarding the price of the deal. (It was most likely several million dollars below the rumored price of $5m. With $600k in investment and virtually no revenue, it’s more likely the deal topped out at around $2m). Also notably missing in the confirmation of the deal was any information about the fate of Wallstrip’s video host: Lindsay Campbell.

When the first peeps about the deal were circulating almost two weeks ago, most were speculating that Lindsay was a major part of CBS’s interest in the site and purchase  – and that she was only available with the program and not as an independent employee.  Be interesting to see where she ends up. Based on the couple episodes of Wallstrip’s programming I’ve scene, she seems like she could have a successful career in front of the camera. Quoting what I wrote in the previous article on the Wallstrip rumor: "She [comes across as] well educated, credible and articulate, balanced with a style that feels hip, casual and light-hearted enough to appeal to younger audiences in Gen X and Gen Y."

UPDATE

As is often the case in deals involving private companies, especially when the news is still being closely held, there is much speculation regarding terms of a deal, and the finances of the company involved. In my first post on the rumor, before it was confirmed, I noted accurately that reports of Wallstrip having zero revenue were wrong. That’s been further confirmed in the blogs of some of Wallstrip’s investors (here and here). There’s been no information, nor is their likely to be any released, regarding what revenue Wallstrip did or did not have. Characterizing their revenue as “virtually none” was speculative based on the age of the company and the nature of their business. Whatever the actuals, whatever the ROI, I’m sure it’s an exciting time for all at Wallstrip. It’s easy to question deals but speculation takes nothing away from the check they’ve got in their hands for something they built.

In the past month and a half there has been a tremendous consolidation in Internet advertising.

• May 18: Microsoft announces it will pay $6b in cash for aQuantive, parent to digital agencies Avenue A, Razorfish, Atlas and DRIVEpm.  That price constitutes a huge premium relative to $442m in ’06 revenue (net income was $54m)
• May 17: British advertising giant WPP Group, which is known for its offline ad services,  announced it would acquire 24/7 Real Media for $649m. (the price represented a premium of approximately 17x EBITDA)
• April 30: Yahoo acquired the 80% of internet ad auction exchange Right Media it didn’t own for approximately $680m.
• April 13: Google acquires DoubleClick for $3.1 (price represents approximately 20x EBITDA) (more here)

Much commentary referring to these deals has focused on extreme valuations.  Quite a bit has also suggested each new acquisition was an answer to the one that came before; a suggestion  as if each acquisition had been a part of a game of competitive one-upsmanship between Yahoo, Google, and Microsoft.

To suggests Yahoo bought Right Media because Google bought DoubleClick or Microsoft is buying aQuantive because they had to keep up with Google and Yahoo is misleading.

These deals didn’t happen overnight – they happened over weeks and months.  Several of these deals were in discussion at the same time, and most were on internal target lists for more than a year.  While the time lines for the deals closing, or pricing discussions that went on, might have been influenced or accelerated in response to announcement of the other deals, these acquisitions are largely independent and, in many ways, they’re best viewed as singular events.

As unrelated transactions, there’s a theme -  three of the biggest companies in Internet advertising believe the ad market is changing and growing, and doing so dramatically. 

All three deals  (four if counting WPP Groups purchase of 24/7 Media) also closed at significant premiums whether valued by market valuation or projected sales.  (At $6b for aQauntive, Microsoft payed more than 2x the prior day’s trading price.)

Why the premium? Did the companies overpay to make these deals happen or do they know something the market doesn’t?

People will form their own conclusion on that question; and only time will put a final answer on the debates- which are plenty.  But Microsoft, Google and Yahoo are three companies with more data on net advertising than just about any others.  You’ve got to wonder if their data is telling them something.  I think it is.

Forecasts put the size of the Internet Ad Market between as much as $25-40b this year with projected growth of 15-20% per year for the next five years.  Microsoft is among those forecasting on the higher side of those numbers. 

 Most forecasts (whether from independent analysts, tracking agencys or companies selling in the market) don’t account for the possibility of ad buyers shifting their ad–spend from television (or print or radio) to the Internet.  Even relatively subtle shifts of ad spending from the $300b US ad market could make the forecasts incredibly conservative.

It’s not unreasonable to think that kind of shift could be possible sooner than later, especially from Television to the Internet.  As it stands now, premium Television content is increasingly available on the web.  All of the major networks are rebroadcasting programming online (not to mention the volume of IPTV startups vying to participate; or the availability of downloadable programming from places like iTunes.)  The increase in viewing outlets increases the possibility of audiences shifting their viewing habits away from TV.  and ad-spending will follow the viewers.  Mix that fact with the wealth of user-generated content on sites like YouTube or Revver that could be host to display ads.  Then ad to the equation  the fact that  more than 20% of US households own already own DVRs and when watching recorded shows, often skip the commercials – which poses another threat to the value proposition of traditional TV advertising. Click to Read More

Earlier today, MySpace announced it would be launching branded video channels that will feature news and lifestyle video syndicated from partners including the New York Times and National Geographic.

The announcement was timed to make a statement.  This is the week when the major television networks begin the sales push for advertising for their fall show lineup. By announcing today, MySpace is boldly saying “Net Video is here to stay, and it’s going after TV.”

Among the content to be offered will be shorts from National Geographic shows like Explorer, movie reviews, content from News Corp’s IGN Entertainment channel, as well features on young celebrities, animation, and a channel from the popular web property The Daily Reel – a selection of short video clips from around the web.

Some large portion of the content will be available through a number of other outlets including traditional and Internet TV (National Geographic has been actively licensing its content including most recently to IPTV company, Joost).