Google Inc.’s (NDAQ: GOOG) may have forked over 20 times DoubleClick’s estimated revenues of $150 million, but the acquisition now looks like it could pay off handsomely. The search giant wrapped up the $3.1 billion deal yesterday after it received approval from regulators in the European Union (see story). Many believe that Google will be able to leverage its existing businesses to make this acquisition a huge success. So, is Google a buy now?

Google has always focused on textual advertising as it can be easily quantifiable in terms of sales and is easily integrated into its search engine. However, there is also something to be said for the so-called “display advertising” business that seeks to promote brands more than just generate sales. This is where DoubleClick steps in as it has relationships with virutally every major online publisher and more htan half of the online ad agencies.

The display advertising industry itself is worth around the same as the textual advertising business. The three major players, including Yahoo! (NDAQ: YHOO), Microsoft’s (NDAQ: MSFT) MSN, and Time Warner’s (NYSE: TWX) AOL, brought in over $10 billion in such advertising in 2007. Meanwhile, banners will account for more than 40% of the $19.5 billion expected to go to online advertising this year. All of this compares to a mere $5 billion in revenues from Google from its textual advertising business, in which it is the largest player.

The million dollar question is: How much can Google grow DoubleClick’s business? Many believe the answer to that question is “substantially” given the fact that the search giant already has both a platform and relationships with thousands of publishers and advertisers. The value then becomes very clear: If Google can take a mere 10% market share, it could mean new revenues of well over a billion dollars. Additionally, these revenues would be on a high profit margin, so they would impact the bottom line.

Many investors are hoping that this is the case, since Google’s textual advertising business has been waning lately. The acquisition also gives Google more exposure to different publisher and advertiser demands, meaning that it could convert itself to a one-stop shop for online advertising and squeeze others out of the space. In the end, these factors make GOOG a stock worth watching closely over the next year as investors get a glimpse of just how valuable this acquisition really was!

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