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Google Taps Teracent for Real Time, Customizable Ads

Advertisers will be able to better customize and personalize Google display ads with new technology the company is incorporating from its latest corporate purchase.

Google announced this week it was acquiring display ad start up Teracent, a firm that has made a name for itself with real time algorithms that can customize and automatically build ads from among thousands of different choices of creative elements.

The algorithms can incorporate user information, such as a viewer's geographic location - and can tell, for example, if a viewer is searching for hotels in Italy - and customize the images accordingly.

Creative elements that can be customized range from images to products to messages or colors, according to Neal Mohan, VP of product management, and Joerg Heilig, engineering director, who wrote a blog post about the deal. "These elements can be optimized depending on factors like geographic location, language, the content of the website, the time of day or the past performance of different ads," they said.

Mercedes-Benz recently found that such variations can have a profound impact on performance when it began testing display ads with Teracent using several different variables ranging from general copy testing to varying background and call-to-action button colors. The primary success metric - an action indicating buying intent - saw a significant increase as a result, the company said.

The Google-Teracent deal is expected to close this quarter. The terms were not announced.

Taking on Yahoo

For the moment, Yahoo dominates the display ad market. A comScore study earlier this year found it was the top publisher - and AT&T the top display advertiser.

Despite its leadership position, however, Yahoo's market growth in this area has suffered setbacks from the recession - and from a general perception that display ads do not work as well as other forms of online advertising. Recently, though, Yahoo's display ad business has experienced a slight upswing, according to its Q309 earnings. The company registered its second straight quarter of sequential growth for its display advertising business last quarter - a 2% quarter-over-quarter incrrease that was led by gains in the consumer products, entertainment, and finance industry sectors.

A Sleeper Build Up

In another potential threat to Yahoo, Google has been quietly building up its capabilities in display ads. Last month  it launched a new tool to help marketers judge how, or even if, a particular online ad campaign has raised brand awareness or active user interest. Called Campaign Insights, it is being made available for larger display ad campaigns across the Google Content Network in the US and the UK.

In general, Google has been focusing on several elements of its display ad operations, said Nikesh Arora, president of global sales operations and business development, on Google's recent Q3 earnings call.

In its owner-operated properties - namely YouTube - Google is adding new partners and advertisers and further improving monetization, Arora added. "Ninety percent of the top-50 Ad Age advertisers have run campaigns with successful results on YouTube." Companies that have used the channel include HP, Palm and McDonald's. Now the company is in the process of relieving unsold inventory, "an area we expect to further drive monetization."

The new DoubleClick ad exchange is also a key part of Google's display ad business. Introduced last quarter, it is being well received with more than half of the largest 25 ad networks using it, according to Arora.

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