Expectations for how much revenue Google’s fully integrated DoubleClick Ad Exchange will generate are running high. By the end of next year, the revamped display ad sales platform could double DoubleClick’s revenue stream, says BernsteinResearch’s Jeff Lindsay in an analyst note. The expansion of the DoubleClick platform to include AdSense and AdWords should dovetail with an upswing in display ad spending. Lindsay also argues that despite the hype given to the integration — which was promised two years ago when when Google (NSDQ: GOOG) paid $3.1 billion for DoubleClick — is not the “Nirvananian” linkage of paid search data with browser cookie data to create super-charged display ads. The change isn’t that big. Technological hurdles and privacy issues will hinder such a holy grail for at least several years.
In general, the use of Google’s automated ad serving for the DoubleClick service will make it easier and therefore more attractive for Google’s existing customer base to participate in the display market. Plus, advertisers will be able to use both the AdSense sponsored search links and tie that to display in a single campaign. So it’s a big leap for DoubleClick, but it’s likely to remain a blip in terms of Google’s total revenues, representing just 1 percent of Google’s search-driven ad sales.
More broadly, Google’s entrance into the display space won’t have much of an effect on rivals like AOL (NYSE: TWX), Microsoft (NSDQ: MSFT) and Yahoo (NSDQ: YHOO), which get much more of their revenues from graphical ads.
Speaking of the competition, Lindsay also adds that he believes there’s been an over-reaction to Yahoo losing eBay’s affiliate search business. eBay (NSDQ: EBAY) was basically a nice marquee name to have on its customer list, but the business itself wasn’t worth more than $50 million in revenue, or less than 0.7 percent of Yahoo’s projected 2010 gross revenues.