Google has spent a fortune perfecting their display advertising efforts in recent years. Since acquiring DoubleClick in 2007, the company has released a number of new features to improve its technology, and just recently they agreed to plunk $750 million for AdMob and strengthen their presence in the mobile arena. Now, for the second time this month, Google is pulling out the checkbook to grow its advertising empire.
The search giant announced it is paying an undisclosed amount for Teracent, a California startup that specializes in creating customized display ads in real-time based on machine-learning algorithms. To illustrate the technology's potential, Google compared a traditional Google AdSense-generated advertisement, to a heavily tweaked and optimized ad as generated in real-time by Teracent's complex algorithms – as shown below.
While regular display ads always look the same for every user, Teracent's ads (on the right) are automatically created from multiple creative elements and can change according to factors like geographic location and language, as well as the content of the website, time of day, and the past performance of different ads.
The technology can help advertisers get better results from their display ad campaigns, according to Google, while in turn enabling publishers to make more money from their ad space. The move might also come as a blow to Yahoo, which is currently working with Teracent to deliver SmartAds on its mobile properties. It will be interesting to see if Google will continue this partnership should the acquisition go through.