In a nutshell, it's not that they don't WANT to work with Google, it's that Google doesn't necessarily play well with others technologically:
Marketers complain that Google won't allow them to deliver ads using third party management firms such as DoubleClick and Atlas. These platforms and others like them have helped consolidate serving and reporting for display campaigns that can run on hundreds of individual sites....
As a result, he said, using Google for brand campaigns results is a waste of time and energy. "Google has built this closed loop world, which I think is only a short term prospect for them," he said. "They need to open it up."
Brand agencies haven't really warmed up to the idea of including Google in their campaigns at this point, and this technology issue is delaying the process. Google released a statement saying that while they allow third-party tracking, they don't offer third-party serving "at this time."
Sounds like they're ready to relinquish a little bit of control to gain a little bit of the Madison Avenue pie. As ClickZ points out, they've spent a good part of the last 12 months grooming themselves for this market -- including the lease of their posh Manhattan space -- so they're going to need to kow-tow to the agencies a bit if they're going to ultimately snag the branding business.