MOUNTAIN VIEW, CA — Bundled inside the package represented by Google’s recent acquisition of Web-advertising network DoubleClick came a nifty little company that has search-optimization and search-engine-marketing firms worried.Performics directly competes with SEM and SEO companies that for seven years have partnered with Google in order to further their clients’ online agendas.
“[Google’s acquisition of Performics] puts us in the awkward position of competing with Google’s own [SEM/SEO] agency for client accounts,” Lance Loveday, chief executive officer of Closed Loop Marketing, an SEO and SEM firm, told the Washington Post.
The move has changed the playing field for SEO and SEM firms, a class of businesses that rocketed to prominence in the internet age as the go-to teams for companies that want to increase their online visibility. Now that Google owns Performics — once just another wolf in the pack — SEO and SEM companies worry Performics will gain a significant edge by having unprecedented access to internal Google information. In addition, they believe, there is a very real possibility Google will offer Performics’ services at discounts outsiders are unable to match — or possibly even free.
Such a move would be bad for Google, observers say, because SEM and SEO companies have tremendous influence over how their clients spend online advertising dollars. In other words: Mess with Performics’ competitors, and Google could find its Double-Click coup costing more than the search giant bargained for. A massive pull of search-advertising dollars by SEO and SEM companies upset over what they view as Performics’ unfair advantage could negate the value of the DoubleClick buy. Google acquired DoubleClick to increase its advertising revenues and its profile in the extremely lucrative online marketing space.
Analysts say a perceived conflict of interest may lead Google to consider selling Performics if it wants the company to survive. Performics’ raison d’etre is to provide its clients with the most bang for their buck. Since Google’s survival depends upon selling search-engine advertising, an SEO/SEM company owned by the search giant hardly could provide unbiased advice, now could it? Would Google really want to diminish the approximately 79-percent of the U.S. search-advertising market it reportedly has garnered? The total expenditures in that segment during 2007 were a whopping $10.2 billion, accounting for more than 40 percent of all online ad spending, according to research firm IDC.
“The merger effectively gives Google more pricing power and without proper unbiased analytics, large amounts of money can be wasted very quickly on [pay-per-click search advertising] campaigns, which Goggle and competitors like Yahoo are glad to take,” Ron Rule, lead developer for Web analytics firm iWebTrack, told the Post.
So far, Google has remained noncommittal on the question of whether it will divest itself of Performics.
“We intend to spend the next several months assessing all of DoubleClick’s products and services, including those offered by Performics,” the company said in a prepared statement. “In the near term, we intend to operate Performics as a stand-alone business unit consistent with its past practices. Upon the completion of our integration planning with respect to Performics, we will be in a better position to announce our future plans for this business.”
