Does Google still need to be a Search Co?

So...Google stretched its reach across the value chain and bought DoubleClick this weekend. There has been so much written already - a good writeup at GigaOm here..

Three things about all this interest us though:

Firstly, the above article makes reference to something we noted in our research for our report just published on Telcos in Advertising - the Return of the Banner.

We had opined last year (to a bit of derision in some quarters I may add) that there is a limit to click through classifieds, as we had picked up increasing rumbles that Brands can't really build up mindshare this way and that they needed the broad e-Canvas of banners for this role.

Secondly, this is Microsoft level of concentration of market power - as the Wall Street Journal notes:

“Google’s purchase of DoubleClick combines the two largest providers of online advertising delivery and is going to reduce substantially the market competition on which Web sites rely on to provide advertising,” said Brad Smith, Microsoft’s general counsel. He said that, taken together, Google and DoubleClick would handle more than 80% of the advertisements served up to third-party Web sites when a user pulls up a page."

Possibly a bunch of non-sweet grapes from said Microsoft, but considering the power of the Online Ad market it's a worrying trend - maybe one for regulators to consider?

(update 23/04 - GigaOm has picked up this angle as well)

More worrying still (for competitors) is that there is quite a lot of chatter about Google/Doubliclick setting up an Ad Exchange (AdBay?) - with that amout of market power plus the 'Net's first mover advantage rules that's scary for other players.

Thirdly, the potential corollary trend is that Google is clearly not a pure Search Engine business anymore, its an Ad Company - so does this imply that it will be spending less and less of its time / resources / focus on good old Search.

Maybe its just us, maybe it's the New Net, but in our experience Google search is not quite what it used to be - (be interested in other people's views).

If so, the interesting (hypothetical) question then becomes...what happens to a Net Ad Co if its Search is no longer seen as the best search destination - can you run the prime AdCo without being the prime SearchCo?

Hah...seems like others are finally tumbling this one too