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Ad Technology: Display Advertising and the Growth of Programmatic

Ad Technology: Display Advertising and the Growth of Programmatic

By
Harikesh Nair, Allan Thygesen, Jaclyn Foroughi
2015| Case No. M356| Length 15 pgs.

In April 2007, Google, one of the world’s largest online publishers, announced that it was acquiring DoubleClick, a technological platform for online advertisers and publishers, for $3.1 billion. At the time, the deal marked the largest acquisition ever for Google and, according to reports, ended a weeklong bidding war with Microsoft, Yahoo, and AOL. The acquisition of DoubleClick’s technological platform and relationships with publishers, advertising agencies, and advertisers helped push Google beyond search and text ads—and boosted the search giant’s display advertising business, where Google lagged market leader and competitor Yahoo. As a result, the deal gave Google a meaningful edge over competitors in the $7.1 billion U.S. display-related ad market (and $21.2 billion total U.S. online market) of 2007.

The acquisition of DoubleClick by Google was one of the most significant, if not the largest, mergers and acquisitions (M&A) deals in advertising technology (ad tech) history. And while the number of ad tech M&A deals slowed from 2008 to 2010 following the global recession, the years 2011 through 2014 saw record numbers of M&A deals valued at roughly $12 billion. Meanwhile, tepid ad tech-related IPOs raised fears over an ad tech bubble. Reasons for investor skepticism included uncertainty over valuation metrics and a general lack of understanding in the space. This case serves to explain ad tech as it relates to display advertising by reviewing a brief history of the channel, examining the market, and then discussing current industry issues, best practices, and emerging technological solutions.

Learning Objective
Students are provided with a primer on advertising technologies as the foundation for further discussion on monetization.
Keywords
marketing, advertising, advertising strategy, advertising media, marketing channels, marketing strategy, internet marketing, monetization, ad tech
This material is available to current Stanford GSB students, faculty and staff. Please direct further inquiries to the Case Writing Office.