What's Behind Google's Teracent Buy

The ad software acquisition is a blow to Yahoo!, a win for marketers.
Google's plans to double-down in display advertising were underscored with its announcement Monday that it would acquire San Mateo, Calif.-based ad software company Teracent for an undisclosed price. The move means display ads will soon become the industry's new search.

Teracent runs software that lets advertisers, agencies and ad networks deliver multiple versions of ads to different users across the Web and on mobile phones. It takes information that can be determined by a person from the Web, such as location, gender, income and interests, and triggers certain messages to be sent out based on that data.

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A car maker such as Ford ( F - news - people ) or GM would be able to use the technology to send out a promo for a snow-covered sport utility vehicle to Montana viewers, while those in Southern California might see an ad featuring a convertible.

This practice is nothing new. Teracent was founded by Vikas Jha, former vice president of Yahoo!-acquired ( YHOO - news - people ) software company Inktomi, in 2006. Competitors such as Tumri, also in San Mateo, and San Francisco company Dapper, predated it. Companies have been behaviorally targeting consumers more extensively over the past few years so they can deliver customized ads.

What's the different? Google ( GOOG - news - people ) is using the software to automate display ads in the same way it did with search ads, attempting to make Internet display ads more relevant for both consumers and advertisers. It's also nabbing the technology from its main competitor, Yahoo!. Teracent and Yahoo! partnered in May, delivering ads for companies such as Hewlett-Packard ( HPQ - news - people ) and Travelocity. Yahoo!, until now, has surpassed Google in its display ad offerings.

The move comes as a blow to Yahoo!, which may have to end its partnership with Teracent, but it's a big win for marketers, says Will Margiloff, chief executive of New York digital marketing agency Innovation Interactive. Marketers will be able to create interactive ads that will retarget just like search advertisements do, hitting the consumer when he's showing intent.

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Congratulations to Teracent! Dynamic Ads have delivered on expectations and have both increased the relevance of ads to users and resulted in far superior performance for advertisers. Struq is the

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And they'll be able to do it on a much larger scale, pushing out more targeted ads to online video and mobile devices, which have lagged behind banner ads on the Web. When consumers run across an average of 2,000 online ads per day, developments to reach them more successfully are key.

Fonte: Forbes.com