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Google to sell part of DoubleClick |
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By Jennifer LeClaire
Google has split the DoubleClick Performics unit and will sell the controversial search-marketing portion of its $3.1 billion acquisition. As expected, Google will also lay off 25 percent of DoubleClick's staff, about 300 employees. Google's decision on DoubleClick Performics is expected to defuse critics who cited a conflict of interest.
Google on Wednesday said it plans to cut 25 percent of U.S. employees at its recently acquired DoubleClick unit. The search titan also plans to sell off DoubleClick's search-engine marketing assets.
It's all part of the integration planning for Google and DoubleClick products and business units, according to Tom Phillips, director of DoubleClick integration. Google has been exploring the possibilities since it closed the $3.1 billion acquisition on March 11.
One of the conclusions: Google is better off splitting the DoubleClick Performics business into two separately run business units: affiliate marketing and search marketing.
"It's clear to us that we do not want to be in the search-engine marketing business. Maintaining objectivity in both search and advertising is paramount to Google's mission and core to the trust we ask from our users. For this reason, we plan to sell the Performics search-marketing business to a third party," Phillips explained.
Maintaining Search Objectivity
According to Phillips, Google is betting selling off the search-marketing arm will allow the company to maintain objectivity while making room for the search-marketing business to continue to grow and innovate and serve its customers.
While Google has not identified a buyer, Phillips said the company has received preliminary interest from a number of its current partners. Meanwhile, search marketing will continue to run as a separate entity until the division is sold.
"We plan to integrate the affiliate-marketing business into existing Google operations, providing enhanced value and reach for our affiliate advertisers, and additional tools and monetization opportunities for our publishers," Phillips explained. "Together, we believe that we can continue to grow this business and deliver on the high expectations from partners."
Greg Sterling, principal analyst at Sterling Market Intelligence, expected Google to take quick steps to sell off the search-marketing platform. That's because Google received a lot of criticism about the possibility it would retain DoubleClick Performics in the face of perceived conflicts of interest.
"There was concern that Google would provide some favorable treatment or insider access to the Performics client," Sterling said. "Whatever reality there would have been, the danger is this perception, so this is the right thing to do."
Layoffs Not a Surprise
Google will lay off about 300 employees in the wake of the acquisition. The decision comes as no surprise. Google CEO Eric Schmidt hinted at the layoffs in his March 11 blog post announcing the acquisition, explaining that Google would spend some weeks matching and aligning DoubleClick employees with its organizational plan.
"What's interesting is that Google has been on this hiring binge for the longest time and these layoffs contradict that. In the larger context, people get concerned about Google's growth and whether clicks are down or up," Sterling said. "This is a recognition that Google is human and the economy is very mixed, so it can't simply absorb all these employees."
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