In case you didn’t see it there was an article in the Wall Street Journal this morning that seeks to capture a kind of shift or broadening of advertisers’ attitudes toward search marketing. Formerly search was something of an island and not well integrated into wider marketing campaigns. Many search + display studies and several years later it appears that marketers have developed a somewhat more nuanced view of search in the context of broader consumer behavior.

Here are some bits from the article:

Sprint is buying the top ads tied to phrases consumers tend to search for when they are close to making a purchase, such as “cellphone rate plans” and specific products like “Samsung Reclaim,” rather than more generic phrases they search for at the beginning of the shopping process, like “Sprint,” “AT&T” and “cellphone”  . . .

Volkswagen is coordinating its search marketing strategy with its network of 600 dealers across the country so it doesn’t end up competing against itself for the same terms and driving up prices…

[N]ew research from the search division of GroupM Search (a media buying and planning unit owned by ad holding company WPP) and online measurement firm comScore [ ] shows that consumers exposed to social media campaigns are likelier to search and click on that brand’s paid search ad.

“A few years ago, search was a little bit more progressive. Now, it’s mainstream,” says Simon McPhillips, director of media at Sprint. “The incumbents are trying to figure out, ‘What is the next new frontier?’

None of this is a surprise, nor do the examples above represent incredible sophistication on the part of marketers. It does however represent a widening of the “aperture” around search and search user behavior. As much as it may be driven by economics and not wanting to compete on brand or “generic” terms, which still constitute the majority of search queries, it reflects a better understanding that search queries occur in a larger context — of social media, display, traditional media and word-of-mouth-like viral behavior.

The article also speculates about how such trends are causing some slowing of search-ad spending at Google and how Google is pushing into other areas (display, video) as higher growth opportunities, as a consequence.

DoubleClick’s advertising exchange has been in the works since at least 2007 and before Google acquired the company. But this morning Google is formally announcing the new DoubleClick Ad Exchange, which reflects a milestone of technology and platform integration between Google and its DoubleClick unit.

Google sees this an an opportunity to attract more display and brand ad dollars online and to boost revenues on that side of the house, where there is much more room for growth than in paid search (at least in the US business).

Some version of an “exchange” has been around for awhile at DoubleClick but mostly under the radar. However with this formal launch or relaunch Google is late to the exchange party. Yahoo with its acquisition of RightMedia in 2007 and Microsoft with its parallel 2007 acquisition of AdECN have been actively in the exchange business for a couple of years.

There are a number of others too calling themselves exchanges, including ADSDAQ, Traffiq, even AdBrite characterizes itself as an ad exchange. Indeed there may be as many as eight or more “exchanges” operating today in online display advertising. That compares with almost 400 “ad networks” of one sort or another. The promise of an exchange is greater efficiency, greater transparency, broader reach for advertisers and better yields for publishers.

Google says that it has been working hard for the past couple of years, since the DoubleClick acquisition closed, to integrate the companies’ technology toward these goals. It says it already has the majority of the top 25 online display networks signed up as well as major newspaper publishers, magazine sites and others. There’s no exclusivity dimension so publishers theoretically can participate in the DoubleClick exchange and other exchanges. But the point of an exchange is to get access to what amounts to the whole market rather than having to go from place to place to fill inventory or buy audiences.

Google says the DoubleClick exchange will be “seamlessly integrated into the AdWords platform and AdSense on the publisher side.” Here’s how Google describes the process and the benefits:

The new DoubleClick Ad Exchange has been rebuilt using Google’s technology and infrastructure. It contains a wide variety of key features that will help improve returns for advertisers and enable publishers to get the most value out of their online content.

On the “sell side”, participation in the new Ad Exchange is designed for major online publishers. It already includes a wide variety of large premium publishers including newspapers, large portals, entertainment and branded sites. In addition, ad space on Google’s third party AdSense publisher sites, representing over 76% of U.S. online audiences and 73% of global online audiences**, is being made available through the new Ad Exchange. This will increase the volume of quality display advertisers available to Google’s AdSense publishers.

On the “buy side”, the new Ad Exchange is designed for ad networks and agency networks – companies that connect web sites with advertisers. It already includes over 40 ad networks across North America and Europe, including most of the 25 largest ad networks in the US*, with more now to be added. Additionally, AdWords advertisers will be able to run ads on sites in the AdExchange, using their existing AdWords interface.

Features of the new Ad Exchange include a completely new interface; a “real-time bidding” feature to allow ad networks to use their own technology to bid on an impression-by-impression basis; a “dynamic allocation” system, which automatically generates online publishers the highest return for every impression by allocating ads to the highest-paying sales channel, based on real time data; more granular publisher and advertiser controls; payments and clearing managed by Google; and a new API to allow ad networks to extend the functionality of the Ad Exchange.

As a basic matter, to gain access, publishers need to be on a Google ad server, especially DART (the system’s not compatible with OpenX or Altas for example). And though the system uses a real-time auction for each impression, large publishers may set a minimum reserve price. Smaller, existing AdSense publishers will not be able to do the same but Google says that increased competition for their ad inventory will boost CPMs.

Invoicing and payments will be uniform and greatly simplified for both sides according to Google. And the tools will all be integrated and accessible through the AdWords dashboard.

In terms of Google’s display ad strategy — an arena where it has the potential to realize the most growth and new revenues — there are really three (or four) components: new and improved display ad formats for the content network (and integrated into search in some cases), video on YouTube and via Google TV Ads and this new ad exchange. Given Google’s reach, influence and footprint, this could turn out to be a huge new arena for the company.

Danny may weigh in on this point but on the call with Google we were struck by a kind of “bifurcation” between the way that large and smaller publishers are handled in the system, vis-a-vis transparency and minimum pricing. Larger publishers in the exchange will have complete transparency in terms of understanding Google’s share/commission on transactions. Whereas small AdSense publishers remain largely in the dark about the revenue split and won’t be able to set a reserve price.

Putting that aside, and others may have more to say on that point than I, with this announcement Google has joined the battle for display advertising dollars in earnest and signaled its intention to be a major player.

The previously rumored Google news site “Flipper” is in fact launching today as “Fast Flip” in Google Labs. But maybe it should be called Google Skimmer because it permits people to move very quickly through lots of visually rich news pages from dozens of partner publications. According to the Google Blog Post:

Fast Flip is a new reading experience that combines the best elements of print and online articles. Like a print magazine, Fast Flip lets you browse sequentially through bundles of recent news, headlines and popular topics, as well as feeds from individual top publishers. As the name suggests, flipping through content is very fast, so you can quickly look through a lot of pages until you find something interesting. At the same time, we provide aggregation and search over many top newspapers and magazines, and the ability to share content with your friends and community. Fast Flip also personalizes the experience for you, by taking cues from selections you make to show you more content from sources, topics and journalists that you seem to like. In short, you get fast browsing, natural magazine-style navigation, recommendations from friends and other members of the community and a selection of content that is serendipitous and personalized.

Here are some screenshots provided by Google, which look quite similar to the originally leaked screens from the earlier “Flipper” rumors:

According to Google’s Marissa Mayer, Google co-founder Larry Page said, “Why isn’t the web like a magazine?” and wanted a way to browse it. Well, Fast Flip lets users visually browse (as well as search) news. There’s also personalization; the site makes recommendations based on your clicks, searches and other behavior.

When you click on any of the stories, you’re taken to publisher sites, which makes them happy. Speaking of which, Google’s initial publisher partners include the NY Times, Atlantic Magazine, Washington Post, Fast Company, ProPublica and Newsweek.

Google is banking that an improved user experience will mean lots of traffic and page views. Google says that revenue generated from ads on the site will be split with publishers. (This could potentially be a goldmine of display inventory for Google if it expands the content from news into a broad range of magazines.)

If it’s a hit, this probably becomes the successor to Google News. And it may be the testing ground for the potential “micropayments platform” that Google is developing for content publishers — it’s all coming together now. I’m only partly kidding with that remark.

We haven’t yet had a chance to try the site but it looks like a much richer and more interesting way to consume news than, well, Google News.

Google says there’s also a mobile version “with tactile page flipping,” for the iPhone and Android.

Google today is launching a form of behavioral targeting advertising named Interest-Based Advertising. Interest-Based Advertising allows advertisers to deliver ads based on hundreds of interest categories and previous interactions with those users. The beta is opening to select advertisers at first but will be expanded in the upcoming months.

Brad Bender, Google’s Product Manager in display offerings on Google Content Network, explained that Google is looking to make ads “more interesting” to users and more effective for advertisers. Interest-Based Advertising allows Google to do that by giving users control over their interest categories and advertisers the ability to target based on those categories and user’s previous actions.

Interest based categories are based on the type of web site a browser visits. For example, if a user visits ESPN often, Google will know that user is interested in sports. Bender told me Google currently has 30 top line categories and about 600 detailed categories. In addition, users have control over these categories and can add or remove categories in the user ad preferences section at google.com/ads/preferences.

Previous interaction is the second area of Interest Based advertising where Google is able to show ads to users based on their browsers previous interaction with that advertiser. For example, if a user had a product in their shopping cart and did not check out, the advertiser can display ads on other sites, within the Google network, that promote that product or that product line. This is Google leveraging their DoubleClick technology from the acquisition in April 2007.

I asked Google how detailed can these ads get? I asked, can an advertiser pass along a specific ad to a specific user? For example, can I show an ad for the Sony HDR-XR200V if this user added the Sony HDR-XR200V to their shopping cart on my site but did not check out? Bender said yes, but ultimately it is up to the advertiser how specific they want to get with those ads.

Initially, those advertisers included in this beta will have a special portal to manage these ads. But ultimately, it is Google’s goal to build the solution directly into the AdWords console. A larger launch will be made later on in the year, after Google works out any bugs or kinks in the system.

The nice thing about this ad solution is that the end user has control over what ads they want to see. At the google.com/ads/preferences section, a user can add or remove interest categories to fine tune the ads they see, or they can completely opt out of these tailored ads. In addition, Google will have two opt out methods. The first is cookie based that will set a cookie on the browser that will opt out the user of these ads for as long as the cookie is on the computer. The second is a long term cookie based on a browser plugin that allows the user to opt out forever, as long as the browser plugin is active. This browser plugin is available for Internet Explorer and Firefox and is coming soon for Chrome.

As many of you know, Yahoo is big into display ads. Google is kind of new to this area and this may be considered Google’s big push into this area. This program does include both the display ad and text ad business, but is completely separate from search. That means, search history is not tied to these ads in any way. In addition, Google thinks they have ad advantage on the technology side. Bender told me Google has a lot of experience understanding the context of the page, plus they can use statistical algorithms to figure out the right frequency and recency and leverage based on buyer cycles. In addition, Bender told me, Google’s content network has a reach of 74% globally, according to comScore. Finally, Google is giving users control over the choice of the ads and privacy through the ad preferences area.

Here are some screen captures of the ad preferences screen:

Here is a screen capture of the advertising cookie opt-out plugin page:

If you want to be part of this beta, Brad Bender suggests you contact your Google account manager. The beta is a very limited test right now and Google does hope to expand it later on this year.

Finally, here is a four minute video on this new Google product:

Postscript from Greg: Google’s foray into behavioral targeting (BT) in the past had been limited to “previous query targeting,” where one might see text ads on Google.com results relevant to prior searches. As Barry discusses above, this move is an enormous step for Google, in my opinion, and it’s the fruit of the DoubleClick acquisition. It also seems like it means the beginning of the end for contextual targeting, which is going to be less effective in most cases.

No one should be surprised by this move, although it will trigger the usual “big brother” reactions. I don’t want to be dismissive of privacy concerns surrounding Google but stepping back, Yahoo and AOL have been using BT for a very long time. And Yahoo has stepped it up recently to incorporate search queries into the BT targeting mix.

To Google’s credit the ability to specify one’s interests and opt out of BT here are innovative and provide a bit more transparency to the program (something that Google must do given its position in the market). These features, to the extent they’re used, could also make the program more effective. I’m particularly interested in the ability to select ad preferences here and what it may represent for the future of online — and mobile — advetising.

Although in the beginning this feature is unlikely to be heavily used, conceptually it represents potential solution to the privacy problems that have dogged BT recently. The FTC has (for now) left it up to the industry to self-regulate guidelines on BT and privacy. But it has effectively said we’re still on the case and watching closely. And in a more regulation friendly political climate things could change over the course of the next year.

There are lots of privacy studies that show consumer discomfort with tracking and targeting (despite consumer desire for only relevant ads). Most recently Burst Media (n=4,000 US adults) found that consumers are now almost paranoid about tracking and don’t like BT:

• Over 60% of respondents are aware of the tracking, collecting and sharing of information that occurs as a result of online activities.
• Respondents do not see value in ads targeted to them based on their web surfing behavior – even if it improves their web surfing experience

Burst found that “based strictly on a description – advertisements more relevant to interest – only one-in-five (23.2%) respondents would not mind if non-personally identifiable information was collected if ads were better targeted.” This is one survey but the results are generally supported by other surveys in the recent past.

There remains a big disconnect then between the intensifying use of BT by publishers and search engines and consumer concerns about privacy. The Google approach offers a potential reconciliation of that divide but we’ll have to see how it works out in practice.

Postscript From Danny Sullivan: I’m off today, so I might come back and add more commentary to this huge change for Google in the future. For now, two notes.

This is a further extension of Google’s “ads everywhere” changes over the past few months (see Drill, Baby, Drill: Google Finance Gets Ads; Google News Testing Them). Google could have been doing behavioral targeting long ago, even without DoubleClick, but the company has seemed hesitant to do so in my opinion because the privacy worries it would have raised weren’t worth the potential revenue.

Indeed, back in 2007, from Google: Not Ready To Behaviorally Target, Google’s position then was summarized as “shying away” from building profiles, with Google’s Susan Wojcicki saying:

“We believe that task-based information at the time (of a user’s search) is the most relevant information to what they are looking at,” she said. “We always want to be very careful about what information would or would not be used.”

But by the following year, Google took part in an FTC hearing about behavioral targeting. Despite the fallout ISPs that wanted to behaviorally target have taken, Google seems like it can no longer afford to ignore this area.

The ads in the current program do not appear to be using past search data as part of building profiles. However, Google confirmed in a session I moderated at the Omniture Summit last month that they have tested behaviorial targeted ads using past search history data. Again, that doesn’t seem to be part of this release, but it could come in the future.

Finally, the use of an opt-out is important. It should help save Google from the fire ISPs took, given that their customers didn’t have an easy option. How clearly that opt-out is displayed will be crucial to help it navigate through the inevitable privacy concerns that will come up.

Google has long been seeking to diversify its revenue base and ad products to attract more ad dollars and different types of advertisers. There’s a lot more money, for example, in brand advertising than in direct response. The YouTube acquisition was partly about getting more display/brand ad dollars. Google’s DoubleClick acquisition was also about targeting the online display/brand segment. In addition, the company has created a new “President, Display Ads” position. Google has also built out Radio Ads, Print Ads and TV Ads to expand the reach of its network. The new announcements today are consistent with these brand ambitions: Expanded TV Ads distribution and a new do-it-yourself display ad builder.

Taking the new display ad builder first, it offers an apparently very simple way for anyone to create an online display unit (or units plural). Of course, once created, those ad units can be served wherever AdSense may go. Here’s a short video demo:

Depending on your point of view this is either validation of AdReady or an “AdReady killer.” AdReady targets small business (SMB) advertisers who don’t have agencies to build their creative (akin to what SpotRunner, Spotzer and others are doing for video). It will be interesting to see who adopts this tool. Notwitstanding the fact that most of Google’s advertisers technically qualify as SMBs, small businesses are very difficult to acquire as advertisers. This is also AdReady’s problem with a self-service offering.

Alternatively, will larger advertisers wind up using this tool? It’s not clear. They have agencies to do this. But some number of marketers will undoubtedly take advantage of it however.

In general display and CPM advertising has been on a flat-to-downward trend online. It’s much softer than search for example in this recessionary economy.

One of the reasons is that there’s an excess of supply. It’s also true that the industry has standardized around the click as the measure of value. That’s shortsighted. Clicks don’t reveal branding impacts and other latent and less tangible effects of online display advertising. Plenty of research has shown the benefits of running search and display campaigns together. (My Search & Display panel went into this in detail at SMX East.)

Perhaps Google is hoping to promote this notion of search and display working together and bring some SEM folks over to display. Yahoo, for its part, has been discussing the relationship of search and display for years. Being able to offer both to realize their combined “synergies” was one of the stated reasons why Yahoo didn’t want to sell its search business to Microsoft.

As with any Google announcement there’s always the question of who it will negatively impact — more sensationally “kill.” I’ve already cited AdReady as a potential beneficiary/victim. Whether this will affect Yahoo, the online display king, is another question. (AOL’s Platform A/Advertising.com is another that could be impacted.) The earlier entry of MySpace and Facebook into the online display market created competition and put downward pressure on CPM ad rates.

A conceptual cousin of Google Display Ads is TV Ads. TV Ads aren’t all about branding; they can have direct response elements too. But both Display Ads and TV Ads are more about branding than they are direct response.

On the latter front, Google announced a deal with Harris Corporation, which helps manage TV inventory for various media companies. This deal (from a publisher perspective, AdSense for TV) is very much like the value proposition Google offers to newspapers with Print Ads: TV companies and broadcasters (publishers) get access to additional advertiser inventory (and revenue) that they don’t have to sell. Google TV advertisers get additional distribution.

Both AdSense for Display and AdSense for TV aim to give more options and more tools to both direct response and brand-oriented advertisers. They also aim to further broaden Google’s reach — into different ad categories and advertiser budgets.

Postscript: Google Appoints DoubleClick Boss to Oversee Display Ads covers how former DoubleClick chief executive David Rosenblat has been named into the new Google position of president, display ads, a further sign of how seriously the company is taking the display ad space.

SES San Jose 2008 is now in the books and another Google Dance — that annual bash that provides us all with so much safe, clean YouTube fodder — has come and gone. Among the various features and benefits — upscale backyard barbecue fare, free beer, modified karaoke, dancing, and light shows — is the most fascinating spectacle of all: Googlers meeting other Googlers. (Oftentimes, I ran across Googlers just sticking with their own little clique and talking among themselves, but what do you expect… it’s a “campus”.)

Google is such an enormous entity by now that it carries a real risk of the right hand not knowing what the left hand is doing. Overall, though, the company does a pretty good job of keeping its initiatives in sync.

But if Googlers are always needing to meet other Googlers for the first time, imagine the effort of digesting a large company in the digital ad space whose founding predated Google’s by two years, and which brings to the table a variety of legacy technologies and platforms along with its own corporate culture. Googlers, meet DoubleClickers!

In April 2008, Google announced that it would divest itself of a key conflict of interest that came with the deal as a DoubleClick division: Performics, the marketing agency that runs a lot of paid search campaigns. Your agency shouldn’t be Google if you’re buying Google ads, clearly. In August, Google wisely sold Performics to a large agency, Publicis, for an undisclosed sum. If my very rough estimate of $300 million is accurate, this move at least effectively reduced Google’s pricetag on the $3.1 billion DoubleClick acquisition, but only by a hair. While letting go of Performics and its headcount, Google presumably retained the mature cost-per-action exchange platform Performics built for affiliate marketing, using this to replace Google’s nascent but slow-to-emerge CPA program.

But is the streamlining effort complete? Widespread layoffs at DoubleClick (at least 500 people) have already streamlined the operation, but arguably there is still a fair bit of DoubleClick clutter that has no real role within Google’s strategy. Of particular note: DoubleClick not only owns, but is currently actively promoting, DART Search, a bid and campaign management platform for paid search. Like a few other current, aggressive players in the industry (such as Marin Software), DoubleClick sales reps are currently cold-calling agencies to ask them to consider adopting the DART Search solution.

This won’t be a product review of DART Search. Maybe another columnist would like to take a stab at it.

A few odd thoughts and questions emerge from the experience of being pitched by a Google-owned but still-distinctive third-but-now-first-party solution vendor:

• Google has never endorsed a single third-party bid management solution, and has never really recommended anyone use third-party bid management. What they have done, of course, is facilitate those vendors’ creation of sophisticated software through an AdWords API. Heavy usage of the system incurs charges to the software vendors, which are passed along to customers. Individual advertisers creating their own custom applications are more likely to receive discounts or to be able to take advantage of free API tokens. The upshot: Google has never endorsed a particular solution. Now they do, but it wasn’t developed by Google. That’s awkward. An awkward question, too: how much does DoubleClick pay for API access? The same as its competitors?
• Google already has its own rudimentary bid management automation, with advanced dayparting (Ad Scheduling) and a new Campaign Optimizer feature that tries to adjust bids to your target CPA range. This forces DART Search reps to dump on Google own current AdWords features to justify the price of the third-party solution. Given that Google engineers may be proud of their AdWords platform, that’s awkward, too.
• A good deal of the benefit of using a campaign management platform is purportedly to reduce the complexity of coordinating campaigns from Yahoo, Microsoft, and other players. But does DoubleClick’s sales pitch really make sense if a good chunk of the rationale for using the DART Search product rests on telling advertisers it’s helpful for advertising with Google competitors? The sales pitch I heard prefaced that benefit with a reminder that Google AdWords constitutes 90% of the paid search inventory sought by many advertisers. Is that really making the case that I should adopt an expensive solution so I can be sure not to get too confused by the goings-on in the accounts making up a 10% sliver of my budget? Awkward logic.
• DoubleClick sales reps intimate that their competitors won’t be apprised of changes to the Google AdWords and Yahoo Search Marketing platforms in advance of rollout, whereas DoubleClick is given advance knowledge so its software can be fully updated for compatibility at all times. Anti-competitive? Not so much that as underscoring the fact that Google is the seller of this solution now, not some “third party.” But where does this leave third parties? An API environment should offer a level playing field. There should be no real or implied favoritism.
• Google seems committed to the product. Recently a Google job ad appeared for a DART Search evangelist, er, trainer. Excerpt: “The training focuses on delivering the the how-tos and best practices of the the DART Search technology’s three main value propositions: trafficking, reporting, and bid management. The Training Associate also incorporating [sic] client, sales, and services feedback into the constantly evolving training curriculum and materials.” The ad also notes that Paid Search experience is “highly desirable.” Other than the eye-opening revelation that Google is moving into the drug trade (”trafficking”?), the fact that Google’s new staffer will be teaching clients the benefits of bid management and reporting features on this platform seems a bit curious. Potential “students” at agencies and client-side operations would naturally wonder if the whole interface is likely to go away or change radically when it is rebuilt by Google (which seems likely). The thrust of my point here is: Google is a proud product company. If they inherit someone else’s mediocre or unintegrated stuff, they probably want to build something better on their own.
• The next and last point is perhaps the most significant. DART Search isn’t cheap. That’s normal for mission-critical bid management systems. Unfortunately, now that we live on Planet Google, solutions offered directly by Google tend to be sophisticated, powerful, and free. For example: yes, a few quirky folks actually pay for the premium Urchin product, but free Google Analytics goes a long way for the rest of us. Google is trying to hurt Microsoft with free office apps. Blogger is free. Gmail offers massive storage to consumers, with no premium version needed. Google can’t train the marketplace to wait for free, and then call up with an offer for expensive stuff that mainly helps you with your Google ad spend (remember, it’s 90% of the inventory you want?). It breaks the spell. It raises odd questions. Or perhaps not so odd questions, like: “Wouldn’t I feel stupid dropping $50,000 on this service over the next few months, only to find that they turn around and offer the bulk of it for free? Why wouldn’t I just wait for that day?”

Confusing, huh? So what’s the strategy?

One observer (a Googler, incidentally) close to the scene admitted to me that he’s not sure there is a strategy. But I’m guessing one will be firmed up soon. DoubleClick doesn’t resemble the type of brand (YouTube or Blogger, for example) that works best staying semi-independent of Google. Its main contribution is platforms and expertise (and business relationships) that will help Google increase its currently dismal share of online display advertising. Although there is little to compare it to, one example — Sprinks, acquired by Google from About.com in 2003 — is telling. Sprinks also had a platform, ad inventory, customers, and a sales force. Post-acquisition, Google simply folded the business assets into Google, fired the staff, and got rid of the platform, as multiple platforms and features get too confusing for users. Google won’t do all of that with DoubleClick overnight. But between the issue of redundancy and the problem of mixed messages being sent to its customers, further streamlining makes the most sense.

In the meantime, will Google continue its policy of not really recommending any bid and campaign management solutions beyond those offered directly in the Google AdWords interface, plus Google AdWords Editor, plus Google Analytics (etc.)? It strikes me that it’s going to look, er, awkward, if the only “third-party” solution Google “recommends” is one they wholly own.

DART Search: Start the bidding? Do I hear $20 million? Maybe a bad buy, though, if a lot of the functionality will soon be built into AdWords by the current Google engineering team (save for the part about making it easy to manage Microsoft campaigns).

Andrew Goodman is the founder and principal of Page Zero Media and author of Winning Results with Google AdWords. The Paid Search column appears Mondays at Search Engine Land.

SmartMoney reports that Google has sold off the search marketing division of DoubleClick, Performics, to a French company named Publicis Groupe.

When Google purchased DoubleClick, they acquired Performics with it. Google promised to sell off the Performics division, due to the conflict of interest in owning such a company. Today, they sold it to Publicis Groupe.

It is actually interesting that they sold it to Publicis Groupe. Google has partnered with Publicis in the past to “expand in the fast-growing digital advertising market . . . [and that] Google would exchange its technological know-how for Publicis’s analytical and media planning expertise.”

The transaction is still subject to some customary closing conditions, but it is expected that the deal will close something in the third quarter of 2008.

Google has launched a new affiliate network named the Google Affiliate Network. In an effort to consolidate the DoubleClick acquisition, Google created the Google Affiliate Network and has announced the retirement of AdSense Referrals, which is part of Google’s Pay-Per-Action product.

Google launched Pay Per Action ads in March of 2007. I saw first signs that the product would be discontinued about 15 days ago.

For those AdSense publishers that run referral ads, you should remove the referral ad code from your site before the last week of August. You should also download and save all referral reports to your desktop, before Google does away with those reports for you.

For AdWords advertisers participating in the Pay Per Action ads, I guess you need to do nothing. Your ads will just stop working. If you want to continue to offer this as an advertising campaign, you should look into the new Google Affiliate Network, which is basically a DoubleClick program.

For more coverage, see Techmeme.

Lawmaker questions Google over privacy practices from Reuters reports Texas Rep. Joe Barton from the U.S. House of Representatives Energy and Commerce Committee quizzed Google on how they will integrate DoubleClick’s data with their own.

Some questions posed include how user data from DoubleClick would be merged into Google’s data, how that data would be used, and if Google planned to continue allowing users to opt out of ad-serving cookies. Google was asked to reply to the committee by June 6. Google responded:

We have had a constructive ongoing dialogue with Rep. Barton’s staff about our privacy practices, and while the integration of DoubleClick into Google is still underway, we will of course respond to his questions.

Scoop: Google Responds To Rep. Joe Barton’s 24 Privacy Questions covers how Google answered him the first time he sent a similar letter last year.

Google to Lay Off About 300 at DoubleClick from the New York Times reports that Google will be firing about 300 employees at DoubleClick. The layoffs will cut down the American division of the company by 25 percent (DoubleClick currently employs about 1,200 people).

Google has not yet confirmed these layoffs. In very related news, Danny just posted Google is selling off Performics, which is a division of DoubleClick. The 300 additional layoffs seem to be in addition to the Performics announcement.

The New York Times did receive a statement from Google:

Since our acquisition of DoubleClick closed on March 11, we have been working to match and align DoubleClick employees in the U.S. with our organizational plan for the business. As with many mergers, this review has resulted in a reduction in headcount at the acquired company.