Google has reached an agreement to purchase Teracent, a San Mateo, Calif.-based startup whose technology platform promises to enable advertisers to adjust and customize online display ads on the fly.
Terms of the deal were not disclosed. Executives at Google expected the transaction to close during the current quarter.
Google has long predicted that via the Internet, brands, particularly direct response brands, will eventually be able to advertise every product in their portfolio, rather than putting resources behind a product or two in a single national ad campaign.
According to a joint blog posting on Monday by Neal Mohan, vp, product management, and Joerg Heilig, engineering director, Teracent’s technology boasts a “machine-learning algorithm” that can instantly optimize a particular display ad by tapping into a database of thousands of different creative elements. Theoretically, a single display ad could feature alternate colors, messaging, pricing or products — depending on factors such as what site the ad is running on, geography, time of day or performance history.
In a hypothetical example provided by Google, a more generic home improvement banner is contrasted with an ad featuring up-to-the-minute pricing on a particular fencing product and the fictional company’s address.
“We think that this technology has great potential to improve display advertising on the Web,” wrote the two Google executives on the company’s official blog.
The Google acquisition is part of an effort to expand the base of display advertisers by automating the creative process. Startups like Dapper, Tumri and AdReady offer tools for advertisers to build customized display units by combining various elements on the fly. Yahoo’s SmartAds product offers the chance for advertisers to dynamically create customized ad units.
The idea is to use technology to solve a problem facing the display ad industry: there is far more supply of banner ad space than demand. Expanding the pool of banner advertisers should, in theory, increase demand — and allow companies like Google a larger pool of ads to match with specific users, likely driving up performance.
The jury is out on whether customization technology can attract new advertisers online. Spot Runner failed in its bid to use technology to automate ad creative for the TV industry, for instance.
But Google is confident that Teracent’s tools will improve online advertising performance and help publishers improve their yield. “This technology can help advertisers get better results from their display ad campaigns,” wrote the company. “In turn, this enables publishers to make more money from their ad space and delivers Web users better ads and more ad-funded Web content.”