Google's DoubleClick to sell search marketing unit

SAN FRANCISCO Wed Apr 2, 2008 8:29pm EDT

The DoubleClick offices are shown in a Denver, Colorado suburb April 22, 2005. REUTERS/Rick Wilking

The DoubleClick offices are shown in a Denver, Colorado suburb April 22, 2005.

Credit: Reuters/Rick Wilking

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SAN FRANCISCO (Reuters) - Google Inc (GOOG.O) plans to split off its search marketing arm from its affiliate marketing business and sell the search marketing business at its recently acquired DoubleClick advertising technology unit.

The online search and advertising leader is looking to spin off its Chicago-based search marketing business, Performics, which employs 200 of DoubleClick's 1,500 staff.

Tom Phillips, director of DoubleClick's integration efforts with Google, said the company wants to dispose of the search marketing business to eliminate the perception Google might favor the unit in its search results and other efforts.

"It's clear to us that we do not want to be in the search engine marketing business," Phillips wrote. "Maintaining objectivity in both search and advertising is paramount to Google's mission and core to the trust we ask from our users."

In preparation for the sale, the Performics affiliate marketing business is being split off from the search marketing business and will continue to be run as part of DoubleClick.

Affiliate marketing is where advertisers pay Web sites to drive users to their ads. Search marketing is a process in which consultants help advertisers choose targeted keywords to help boost the audience for ad campaigns using Web search.

Google is the world's dominant provider of ads that are targeted to run alongside its free Web search results.

DoubleClick plans to run the search marketing operation as a separate business until it is sold. "While we have not yet identified a buyer, we've received preliminary interest from a number of our current partners," Phillips said.

A year ago, when Google announced plans to buy DoubleClick in a deal finally valued at $3.4 billion, the company said it was weighing its options for Performics. Following extended regulatory review, Google closed the deal last month.

The consolidation of independent players in the online ad industry has raised concerns among advertisers at the growing power of Google and Microsoft Corp (MSFT.O), which paid $6 billion last year for DoubleClick rival aQuantive. Microsoft also has an outstanding $40 billion-plus bid to acquire Yahoo Inc (YHOO.O).

Earlier this week, Advertising Age published a column by search industry analyst Danny Sullivan mocking Google for potential sales conflicts that could occur between its search engine and the Performics search marketing business.

"While all the attention on the DoubleClick purchase has been on whether it would make Google too dominant in the online-ad space, some search marketers have worried about a different issue: Is it right for Google to own a company that works for better (ad) placement on Google?" he wrote.

Sullivan hailed Google's move to sell the unit in a post on his Search Engine Land blog and called on Microsoft to do the same with the Avenue A/Razorfish search marketing business acquired in the aQuantive deal.

(Editing by Gunna Dickson and Braden Reddall)

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