Venture capitalists have long been the tough kids in the Internet advertising playground.

Google, Shopping.com and NexTag are just a few examples of the castles they've built. These companies are generating boatloads of cash from advertising placed online.

Lately, though, there's a new breed of investors that want to play: buyout firms.

They're eyeing some of the earlier online advertising companies, like DoubleClick, that could use a face-lift.

San Francisco buyout firm Hellman & Friedman announced Monday that it was joining with other investors to buy DoubleClick for $1.1 billion.

DoubleClick, which helps companies manage their ad campaigns online, began struggling when the Internet bubble burst in 2000.

Many dot-com customers either died or couldn't afford to place ads. Many larger customers developed their own ad-serving software and no longer needed a company like DoubleClick.

DoubleClick tried to adapt its business, only to see the market recently shift back toward its original model -- companies again want help with ad placement and other services. Meanwhile, companies like Fastclick have moved in to steal market share.

By taking DoubleClick private again, Hellman & Friedman can give the company more breathing room to revamp its business without the pressure to produce profits. DoubleClick may return to ad selling, or seek profitable parts of its business to spin out, suggests Vladimir Jacimovic, partner at New Enterprise Associates.

The Google effect

There's a host of other deals brewing in the sector.

Earlier this month, San Bruno venture firm VantagePoint Ventures injected $60 million into Datran Media, a company that does everything from serve ads related to a Web site's content to direct e-mail marketing (read spam) and telemarketing.

Datran's competitor, San Francisco's Adteractive, is reportedly about to raise a huge round of $100 million or more from investors led by General Atlantic Partners, with fundraising help from Perseus Group, a boutique San Francisco investment bank. General Atlantic and Perseus declined comment.

All of these investors are exploiting an online advertising market that is expected to grow to $17.6 billion in 2008, from $11.5 billion this year, according to eMarketer.

If anyone was doubting the money to be made in online advertising, Google's earnings announcement last week was pretty convincing. Google's first-quarter profit was nearly six times higher than a year earlier, driven almost solely by online advertising.

On Monday, Google announced a program to help companies place more graphic, eye-grabbing ads on Web sites, potentially ramping up the revenue stream even more.

The frenzy in VC-land is palpable. For Sharon Weinbar, a VC with Bank of America Venture Partners, Google's robust profits signal opportunity. ``You can't say, `Poof, they're going to go away.' ''

Weinbar just made one investment in a stealth ad-network company and is about to invest in YourAmigo, a Pleasanton search engine.

Narrowing the gap

About 5 percent of advertising dollars are spent online, much less than the 20 percent of time that people spend perusing online content overall, she points out. With worldwide ad spending running in the hundreds of billions of dollars, billions of dollars will move online each year.

'It's a big business, any way you cut it,'' says Bill Ericson, of Mohr, Davidow Ventures, who has made his own investment in Revenue Science.

At Ad:Tech, an interactive advertising conference that began Monday in San Francisco, venture investors were on the prowl.

Jeff Crowe, a VC at Norwest Venture Partners was one. He already has an investment, but was scoping out competitors as well as opportunities.

To be sure, there's bluster, too, as eager entrepreneurs come out of the woodwork. ``A lot of people are boring me to death,'' said David Hornik, VC with August Capital, whose firm has already invested in Shopping.com and others, after attending another recent conference.